What are the five areas of management firms generally are organized into for purposes of information requirements?

 An information system is an integrated and coordinated network of components, which are combined together to convert data into a useful set of information.

Any amount of data with basic values or facts is of no use until organized into a database and analyzed into insightful information that can answer questions or solve problems. An information system is that unit consisting of people, processes, machines and information technology that organizes and analyzes data towards producing, distributing and processing information.

Components of Information Systems

An information system is typically made up of five components: hardware, software, database, network, and people; however they may differ in how they are used within an organization.

• Hardware: It consists of an input/output device, processor, operating system and media devices
• Software: It consists of various computer programs and procedures
• Database: It consists of data organized in the required structure like tables, files etc.
• Network: It consists of hubs, communication media, and network devices
• People & procedures: People are device operators, network administrators, and system specialists, while procedures describe how and what data is to be processed to get specific answers

How does it work:

These five components integrate to perform input, process, output, feedback, and control. During the input stage, data instructions are fed to the systems which are then processed upon by software programs. During output stage, data is presented in structured format and reports.

Examples of Information Systems

Transaction Processing System

An example is an online air ticket booking system, that collects data from users and generates an airline ticket and a bill. Typical organizational departments that use transaction processing systems are sales, account, finance, plant, engineering, human resource, and marketing. Data can be generated from sales order, cash receipts, accounting, inventory management, depreciation accounting, etc.

Management Information System

A management information system(MIS) is used to oversee the performance of the organization. The results from the TPS are input into the MIS to produce management reports that can predict or control future organizational performance. An MIS can be used in different ways within the enterprise like a budgeting system to gather information to set accurate budget monthly or annually based on reports of how much money has been spent by the organization in a specific period of time. Other examples could be as a sales system analyzing data gathered from point of sales and as a human resource information system for collating information about employees, attendance, performance management etc.

Customer Relationship Systems

CRSs track customer activities, purchasing trends, customer inquiries etc. They allow customers to interact with companies for service, product feedback, and problem resolutions.

Decision Support System

Decision support systems are used by managers to provide solutions to problems that are dynamic in nature. This kind of system uses data from internal systems like TPS and MIS to find the best possible choice or alternative to a given problem. They find answers through statistical analysis and mathematical models.

Office Automation System

OAS is useful to improve the efficiency of employees who are required to perform repetitive tasks of data processing. Office functions such as mailing, fax, typing, records management all fall under this category.

Business Intelligence Systems

They predict future sales patterns, summarize current costs and forecast revenues

Knowledge Management Systems

KMS analyze, organize and share knowledge with organization members for innovation and improved performance

Enterprise Collaboration System

ECS stress on team effort or collaboration across different functional teams by enabling collaborative effort and improving communication and sharing of data

Role of Inventory Information System

Optimum calculation of inventory costs

Your organization’s information system can accurately tell you the disparity between inventory costs and sales. With this information, you can set the price of items in conjunction with how much you paid to acquire them.

Maintaining accurate inventory levels

An information system can assist you in managing inventory levels by reports from manufacturing or purchasing, inventory, and sales. This will show you the movement of your inventory through the supply chain. You’ll know which are your best-selling and low-selling products and accordingly tweak your warehouse management to streamline picking, packing, and shipping processes. Since the information system consolidates data from all departments of the enterprise, you can strategize on sales and promotions for items sitting unsold for long. By providing detailed information about stock, information system facilitates greater inventory control,  accurate safety stock calculation, and reduces inventory shrinkage and warehouse costs.

Reporting Value of Inventory

The value of your inventory is not the same as the price on which it was bought.  It is the value on which it has the potential to be sold. An information system can calculate the possible sales value of your current inventory.

Conclusion

Information systems are important tools for managing and collating and analyzing large amounts of data to gain plausible results that help in making informed business decisions. In inventory management too, information systems play an important role as they brief managers about accurate inventory levels, warehouse management needs and help to increase the overall efficiency of the inventory management process.

Although the traditional business planning format does not strictly adhere to this approach, it can easily be adapted for research purposes. Our site has a business plan template that can act as a guideline. Another source for business planning tools and resources can be found at the Canada Business Network.

Researching and designing a business involves a thorough analysis of the business in these areas.

1. Strategy

This important area is, in a sense, the "brain" of your business operation. All potential business operators should create vision and mission statements so they understand what they want to do, why they want to do it and how they will do it.

Also, strategists should analyze the competitive landscape and markets to determine where the opportunity for the business lies, and how they will access that opportunity.

When forming a strategy, determine exactly in what market you will be operating, and then perform a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis on your main competitors and yourself. This will provide a good picture of where you fit in the competitive landscape. This will also help you determine your market access strategy, which involves positioning, differentiating from competitors and branding.

2. Marketing

Since marketing and sales will generate revenue, planners should also thoroughly understand their potential customers and determine how they will reach them. Most new business operators mistakenly use an "inside-out" approach to marketing in that they plan their product or service first and then look for some way to sell it to a vaguely defined group that is "out there."

However this "build it and they will come" approach usually results in much wasted effort, fierce competition from others who have the same idea and, often, failure. Before designing a product or service, business operators should study the market and assess the needs of customers. Find underserved areas. Then shape the marketing of the product or service, and sometimes the product or service itself, to answer those needs.

3. Finance

Most business plans concentrate on this area because they need loans or investment, as well as for forecasting and budgeting purposes. Since money is the blood that keeps a business alive, a business operator should always know how healthy he or she is financially. This requires a realistic prediction of cash flow, even though it can be difficult to forecast the future. To do so, a planner should form an expenditure budget and then a picture of potential revenue. Much of this information can be found by studying similar businesses and adapting their information to the new business.

4. Human resources

A common mistake planners make is to stop at the financial aspect of hiring staff. Of equal concern should be the ability to hire, and whether those hired fit the roles for which they are chosen. For example, some industries are facing acute labour shortages. Therefore the planner may have to understand what attracts workers, and offer them what they want. Today, managers must treat employees like customers, with the same understanding of what motivates their behaviour.

5. Technology and equipment

This involves not only equipment needed to operate the business, but such concerns as communications technology for marketing and sales purposes, or transportation requirements. Understand your needs and balance them with budget demands. Also, the planner may have to be creative when managing technology and equipment. For example, some equipment may be expensive and sit idle most of the time. The planner should then consider renting it as needed, or subcontracting that aspect of production to another company that has that equipment.

6. Operations

In most businesses, this not only involves equipment, but processes. Essentially, business operations are those that create and deliver the products or services to customers. In most start-up situations the business owner performs many roles, including operations. In fact, a familiarity with operations is often why most people start businesses.

In most new businesses, the owner is also the person who performs the operation. But there is a danger in this: The operator must always remember that he or she is managing a business, not working in a job. So management of all aspects of the business should carry equal weight with actual performance of the service or manufacturing of the product. It can be argued that this is also a very common reason for business failure: The operator is more comfortable "doing" and so ignores other important aspects of management.