Information and Decision Making – Chapter 7
Information technology: the use of electronic devices that aid in the creation, management, and use of
INFORMATION TECHNOLOGY AND THE CHANGING WORKPLACE
Knowledge and knowledge workers provide a decisive and irreplaceable competitive factor in today’s economy.
Drucker called the productivity of knowledge and knowledge workers depends on two must have competencies
(1) computer competency (2) information competency
Knowledge worker: add value to organizations through intellect
Intellectual Capital: is collective brainpower or shared knowledge of a workforce.
→ How it is changing business
Electronic commerce is the process of buying and selling goods and services through use of internet.
• B2C – businesses like chapters-indigo sell directly to consumer over internet
•B2B- businesses use internet to make transactions with another business
Stages of Development in E-commerce
( 1 ) Secure an online identity
( 2 ) Establish a web presence
( 3 ) Enable e-commerce
( 4 ) Provide e-commerce and customer relationship management
( 5 ) Utilize a service application model
→How it is changing organizations
-Facilitation of communication and information sharing
-Operating with fewer middle managers
-Flattening of organizational structures
-Faster decision making
-Increased control and coordination
(with external environment)
-helps with customer relationship management
-helps organizations with supply chain management
-helps in monitoring outsourcing and other business contracts
→ How it is changing the office
Progressive organizations actively use IT to help achieve high performance in uncertain environments. It has
changed the nature of the “office” with desk space, access to internet, print presentations, phone calls, working
from office or home etc.
Instant Messaging: instantaneous communication between people online at the same time
Peer-to-peer file sharing (P2P): connects PCs directly to one another over the internet.
-VoIP is used to allow telecommuters to make calls from anywhere
INFORMATION AND THE MANAGEMENT PROCESS
Managers are increasingly expected to excel in their information processing roles
→What is useful information?
Data are raw facts and observations. Information is data made useful and meaningful for decision making.
Information drives management functions. Information is truly useful if it meets the test of these 5 criterias
(1)Timely (2) High Quality (3) Complete (4) Relevant (5) Understandable → Information needs of organizations
-Information exchanges with the external environment
•Intelligence information is used to deal with competitors and key
•Provide Public Information to stake holders and to the external
-Information exchanges within the organization
• Facilitate decision making
• Facilitate problem solving
..uses the latest IT to collect, organize, and distribute data for use in decision making.
Management information system(MIS) is specifically designed to meet the information needs of managers in
daily decision making.
•Decision Support and Expert Systems
DSS is an interactive information system that allows users to organize and analyze data for solving complex and
sometimes unstructured problems.
Group Decision Support System (GDSS) facilitate group efforts to solve complex and unstructured problems.
GDSS software, called groupware, software that facilitates group collaboration and problem solving.
Artificial Intelligence (AI), a field of science that is interested in building computer system with the capacity to
reason the way people do. Expert systems use AI to mimic the thinking of human experts for applied problem
• Web portals and networks
Organizations use intranets and corporate portals allow employees, by passwords access, to share databases and
communicate electronically. It uses the web for communication and data sharing with an organization.
Extranets and enterprise portals allow communication and data sharing between the organization and special
element in its external environment. It uses the web for communication and data sharing between the
organization and its environment.
An important and rapidly expanding development in his area is called electronic data interchange (EDI), uses
controlled access to enterprise portals and supporting software to enable electronic transactions between
→ Managers as Information Processors
The manager as an information-processing nerve centre.
To do all aspects of the management process- success in management is increasingly tied to the opportunities of
( 1 ) Planning advantages: better and more timely access to useful
information. Involving more people in planning process.
( 2 ) Organizing advantages: more ongoing and informed communication
among all parts of the organization. Improved coordination and integration
( 3 ) Leading advantages: improved communication with staff and
stakeholders. Keeping objectives clear.
( 4 ) Controlling Advantages: more immediate measures of performance
results. Allows real-time solutions to performance problems. INFORMATION AND MANAGERIAL DECISIONS
The most obvious problem situation is a performance deficiency: when actual performance is less than desired
performance. Another important problem situation emerges as a performance opportunity when an actual
situation either turns out better than anticipated or offers the potential to be.
Problem solving involves indentifying and taking action to resolve problems. A decision is a choice among
possible alternative course of action.
→Types of managerial decisions
Programmed decisions: applies solutions from past experiences to solve structured problems.
Structured problems are straightforward and clear in information needs. Best applied to problems that can be
Nonprogrammed Decisions: applies a specific solution crafted for a unique and unstructured problem.
Unstructured problems: are ones that are full of ambiguities and information deficiencies. Commonly faced by
higher level management.
Crises is an unexpected problem that can lead to disaster if not resolved quickly and appropriately.
Crises management programs are designed to help managers and others prepare for unexpected high-impacts
events that threaten an organization`s health and well-being. Anticipation and preparation are aspects to crisis
Rules for Crisis Management
( 1 ) figure out what`s going on ( 2 ) remember that speed matters ( 3 ) remember that slow counts too ( 4 )
respect the danger of the unfamiliar ( 5 ) value the sceptic ( 6 ) be ready to fight with fire.
→ Decision environments
A certain environment offers complete information
on possible action alternatives and their
Risk Environment lacks complete information but
offers “probabilities” of likely outcomes for possible
An uncertain environment lacks so much information
that it is difficult to assign probabilities to the likely
outcomes of alternatives.
→Problem solving styles
Managers display three quite different approaches or styles in the way they process information. Some are
Problem avoiders who ignore information that would otherwise signal the presence of an opportunity or
Problem solvers are willing to make decisions and try to solve problems but only when forced into the situation
Problem seekers actively process information and constantl