Laudon & Laudon Chapters 2 and 13. MIST 2001-03/02. Decision making. ▫
Which segment of market and in which geographic territory should I target to get.
Information Systems and Decision making n
Laudon & Laudon Chapters 2 and 13
Decision making n
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Which segment of market and in which geographic territory should I target to get my initial business? What is the hit rate – how many people should my sales persons visit to sell one policy?
MIST 2001-03/02
Decision making (contd.) n
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Decision making (contd.)
What is a decision and how does information help? n
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How do I improve my performance? n
a selection among many courses of action Information helps reduce uncertainty
What is the role of IS in decision making? n
MIST 2001-03/02
Information Systems improve the effectiveness of decision making, by providing decision makers with information related to the decision for which they are responsible
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…. I am a sales person … I am a Sales manager …. I am the General manager, sales
Appropriate information n
….. for appropriate persons at different levels n
…… for making decisions of different kind
MIST 2001-03/02
Levels of management decision Strategic decisions Tactical decisions
Operational decisions
MIST 2001-03/02
Lets look at some decisions
Setting policies and goals
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Implementing policies
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We will identify the under insured and sell our products to them We will target the rural population and get at least 30% of our business by value from them
Day to day
MIST 2001-03/02
MIST 2001-03/02
1
Lets look at some figures Rural Business of LIC Year
Lets look at some decisions (contd.)
based on LIC annual reports
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1994-95
#Policies Sum assured (lakhs) (Rs. Crores) 49.02 21,571
Rural / Rural / total total (policies) (Sum assured) 45.1% 39.1%
1995-96 1996-97 1997-98 1998-99
52.57 60.33 68.40 81.23
21,263 24,278 27,550 35,372
47.7% 49.2% 51.4% 54.7%
41.0% 42.8% 43.3% 47.0%
1999-00
97.04
44,168
57.5%
48.7%
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How often do I make this decision? How long will this decision be effective? Where do I get the required information for making this decision? To what degree of detail should this information be? Can I employ a formula or a procedure to make this decision? At which level of management do I make this decision?
MIST 2001-03/02
Characteristics of management decisions
Let us look at some more decisions n
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MIST 2001-03/02
We shall provide free personal accident cover of Rs 1 Lakh for one year, for all women who buy policy from us with sum assured above Rs 2 Lakhs during Jan-Mar, as women are under insured How many more persons should I meet to achieve my target for this month? We shall place ATMs to facilitate policy holders to pay their premium
Factors: India’s real GDP; inflation rate; total gross domestic savings; household savings rate; projected shift from physical savings to financial savings
Factors: motives of providers and users of savings instruments; age,income and risk factors
Method 2 n
Extrapolation of past growth trends assuming the same Compounded annualized growth rate (CAGR)
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Decision Support Systems n n n
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DSS structure
Analyze the data from a database and provide results of analysis to the manager Best suited for Strategic level and Tactical level Statistical calculation is manipulated to determine characteristics of the data, or to draw conclusions from the data Mathematical modeling
DSS database
Users
DSS model base
Ex: a mathematical model that determines the effect of advertising on sales
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Decision support systems (contd.) n
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DSS Software
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Geographic information systems
Suitable for situations in which decisions are unstructured or semi structured Involves trying different approaches What if questions Goal seeking Sensitivity analysis
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Provides information for decision making based on a geographic location n n n
Demographic data Summarized data Data organized by geographic location
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3
Executive Support Systems (ESS / EIS)
Collaborative applications
•Caters to the needs of strategic analysis
Types of work group apps
ESS software
Form of communication
Same
Document
Electronic messaging
MIS database Users: Strategic managers
Time of Place of collaboration collaboration
External database
Economic trend Consumer trend
Special database
Personal database
Diff
Same
Diff
X
X
X
X
X
X
X
X
X
(Novell Groupwise) Information sharing (Lotus Notes) Document conferencing (MS Net meeting)
Collaborative applications (contd.) Time of Place of collaboration collaboration
Audio Video
Ele.meeting support (Ventana GRP systems)
Time of Place of collaboration collaboration
Form of communication
Same
Document
Diff
X
Same X
Diff X
X
Group calendaring & scheduling (Open Text on time)
X
X
X
Work flow (Filenet Visual workflow)
X
X
X
Audio Video
MIST 2001-03/02
Quiz 2: IS in the enterprise n
Owens-Corning’s enterprise system struggle Refer Case given on Page 64-65 of Laudon & Laudon n email a 250 word write-up commenting on whether installing the enterprise system was the right solution for Owens-Corning. Refer Question 4 on Page 65. Prefix your Roll number to the file name n
