Tasty Food is a small business owed and run by Sherry Soto, it prepares and supplies pre-packed healthy meals. Due to the market is becoming more competitive and TF need to broaden its business, the managing work gets more challenging. Sherry is considering introducing the information system to help manage the work. The report will help sherry understand the information system and see if it will help her
Executive summary 2
1. Introduction 4
2. Discussion 4
3. Conclusion 9
4. Recommendation 10
5. Reference 11
This report is for to advice on what types of information systems Sherry could use that can help the business and how the introduction of information systems will impact the business. It will first look into what is information systems, and how it will help TF, also identify the advantages the information system could gain. At last, we will also study the challenge in using the information system and what we should concern when we use it.
1. Define information systems; explain how they work; and describe their benefits for business. What types of information systems could be used to support TF?
Information system is an integration system composed of computer hardware, network and communication equipment, computer software, information resources, information users and rules and regulations to deal with information flow.
There are five basic stages of the information system as follows.
Input: The data or information a business need will flow in to the information system in the input stage.
Storage, which refers to the data or the information flowed in to the information system will be stored for a time period.
Processing: data and information will be processed in this stage using processing tools, such as data mining technology.
Output. In this stage, the information system will output the final data or information to help the business stakeholders make better operation decisions, such as when to purchase material and the minimum stock level.
Control. In this stage, the information system should be controlled and checked to make sure the information is processed in time and correctly.
The information system has a lot of benefits for business. The benefits can be summarized as following.
At first, the information system is a tool for the corporate to participate in market competition. With the help of information systems, the corporate can effectively reduce the major costs, make better use of existing resources, compress the inventory, reduce the loss of raw materials and support the realization of the overall strategy.
Second, the information system can make effect on the operation of the business mechanism and structure. A complete and advanced information system can accelerate the business operation speed and promote its structure.
In this case, the TF need to use the information system to better make decision about the raw material and pricing. Thus, the ERP system can be used to help TF make better business decisions.
2. Explain how these information systems could help TF in managing the business. How will the introduction of information systems affect management decision-making?
As the most widely used information system, ERP has a core role in an enterprise’s supply chain control and management, and it has mainly the three aspects as follows that can help TF in managing business.
Firstly, the enterprise supply chain can help TF to better manage its resources.
Today’s world is an information age, if TF rely solely on their own resources and not actively introduce advanced management reunification means, it is impossible for it to win in the fierce market competition. An enterprise with an efficient management system must be able to integrate all aspects of its supply chain, that is, suppliers, distribution networks, customers, etc., and the enterprise is able to effectively control and monitor the operation of each link to meet the needs of the enterprise production and operation needs. Only in this way, enterprises can achieve efficient allocation of resources, and then in the market access to competitive advantage. Different from the past, with the diversification of market competition model development, the current market competition is no longer confined to the competition between enterprises and enterprises, it is more focused on the competition of its supply chain. ERP system is a new type of supply chain management system, with the ERP system, TF can better know when to order raw material, where the costs distributed and how to price on products.
Secondly, using the ERP system, TF can build better lean production and agile manufacturing forms.
Lean production form is a new type of business strategy system. It refer to that in the mass production environment, TF can not only consider the relationship between input and output, but also consider the relationship among customers, sales channels, suppliers, etc. into the production strategy. The reason is that the current business world is no longer under an information occlusion era, which is replaced by the information age, a higher information communication era. Market stakeholders, such as suppliers, agents and customers are not just outside participants, they are also evolved into a relationship as the roles of partners. With the ERP, TF can build a more solid relationship with its suppliers, customers and so on. Thus, TF can seize more opportunities in the increasingly fierce market competition, and form a good relationship with its suppliers and customers, and then TF can promote production and enlarge its market share.
Third, the ERP information system can make TF do a better pre-planned schedule.
Through the construction of ERP system, TF can improve the prior planning and control of things. That is, in the daily production and operation, TF can make a schedule and plan about the production, material demand, procurement, sales and other aspects. Thus, TF can not only have a more comprehensive understanding about the whole business cycle, but also TF can have a certain basis to reduce the overrun, overtime and so on. In addition, with the using of the ERP system, TF can enhance the control of t the flow of funds and records data concisely. In the ERP system, TF can query the flow of each capital flow, as well as the occurrence of related business conditions, and according to the specific circumstances, TF can make better decisions and adjust funds.
3. Use Porter’s Competitive Forces Model to explain how these information systems could be used to gain competitive advantages.
The Porter’s Competitive Forces Model is often used to analyze the customer’s competitive environment and to provide the relevant information needed for the enterprise to develop a business strategy. Porter’s five powers include: the bargaining power of the supplier, the bargaining power of the purchaser, the ability of the potential competitor to enter, the substitutes and the competitor’s ability in the industry. Any industry, whether it is an industry to produce goods or an industry to provide service, it will all face the five powers in the Porter’s Model.
Through the ERP information system, TF can know the cost of each department and analysis the cost in time. In addition, the ERP system can also compare the actual data with the purchasing, production, sales and management, and the budget data, so that TF can always implement the budget effectively. Once the actual data and budget indicators deviated from the situation, TF can take timely measures to manage and control the deviations. For example, the ERP system reacts to management in a timely manner when the cost of a particular item is exceeded, and ERP can automatically locks the item so that it does not overdo it before the management makes decisions. ERP can give TF an edge over the competitiveness in the market. With the ERP system, TF can understand which supplier can supply better and cheaper goods and how to price products. Thus, he bargaining power over the supplier, the bargaining power over the purchaser will be strengthened. If TF’s competitors don’t use any information systems, the ERP system will also strengthen TF’s competitiveness since its operation become more efficiently.
4. What are the information requirements of TF? What business process should TF consider making computerized? Why?
The information requirements of TF can be summarized from the following aspects.
First, the duties and rights of every employee and each department.
Second, the suppliers and the inventory level.
Third, the pricing policy of TF and the financial data, such as sales and costs.
In this case, last year, the demand for the pre-packed meals had grown to a level that Sherry had to hire three more staff in the kitchen and also one full-delivery person. And Sherry was also having difficulty in managing the pricing information and raw material. Thus, TF need to consider to make its ordering process and pricing process computerized. Since those two process is the most important and urgent problems faced by Sherry.
The process of ordering raw material should be considered to make computerized. As
5. Explain how collaboration and communication among key stakeholders could be supported using information systems. Explain the use of computer networks (intranets and extranets) and the Internet to serve their needs.
As a small and medium-sized enterprise, TF’s management and structure is simple, the management cost is relatively low. But the boss is the centralized management, the decision-making process has a lot of subjectivity and arbitrariness, which is unfavorable to the long-term stability of the development of enterprises. TF needs to use advanced information technology to achieve a variety of management functions of modernization, and the organization’s management functions should form an integrated enterprise management information system. This system should be a comprehensive management of enterprise, should help the enterprise data become unification and improve the management level and profitability.
There are lots of communication links in a company, no matter a big enterprise or a SME like TF. The communication among key stakeholders is the most important and basic link. The information system, which is like a bridge connecting the inside departments and employees, and connecting the inside with the outside customers, suppliers and so on.
6. What management challenges will affect organizational change during the implementation of the computerized information system?
(1) Challenges lies in the corporate culture. The increasing maturity of information technology have pushed numerous enterprises to the forefront of the information age, the popularity of information technology have achieved a precise and real-time management, the elastic space of management have greatly compressed(Lin,2003). However, in the enterprise computer management, the main activities of the company is through virtual online network, the internal communication tends to be more technological with lower personal contact. In this case, the direct communication between the staff, words and behavior are converted into computer language, human voice and smile is spread on the computer screen in a digital way. As a result, the natural exchanges like face to face communication between people are less and less, the link in the enterprise within the various groups get more and more relaxed, bringing contradictions between the technology and human nature. When faced with the impact brought by information, the enterprises need to pay attention to retain or emphasize the human communication.
In addition, in the information age, enterprises can quickly achieve the business model of global business, in the case of TF, it will hire more and more employees from different background, different nationality and different ethnic group. The employees works across borders, races to form a cross-cultural and diverse work environment, which will be the big trend of future development of enterprise organizations. However, when face with the staff from different cultural background, how to deal with the cultural conflict is one of the challenges lies in the globalization of information. Relevant survey shows that 80% failures of the enterprises in the international market can be attributed to lack of understanding of managers to the international market and culture.
2) The emergence of information traps. Information system could be the industry standard of existing enterprises, if the enterprise does not have the access to the information system, it might be ruthless eliminated. Such as the general use of ATM in the banking industry, if there is a financial institution do not use it, it will fall into an unfavorable competitive position.
However, information technology will lead to the emergence of negative problems. If the business managers are extremely in the pursuit of high technology in information system, it might not be able to achieve high efficiency, but step into the crisis of the barrel theory. For example, the information management system is unstable, and even lost production and customer information, the customer is not used to the new interface, and many people simply refuse to use it; Employees have to use information systems, but there could be numerous mistaking when handling the system, which leads to the reduction of productivity, and even the wrong information and decision-making due to the lag of data. However, in order to solve the existing system problems, companies have to invest more money to update the system, or use a larger information system to integrate or replace the former one, leading to the weird circle of managing the information system building.
Increasing management costs. As mentioned earlier, the application of information systems reduces the cost of the enterprise on many modules. Such as procurement costs, processing costs, the cost of collecting information. However, in contrast to this, companies have to spend some other costs. In the case of data collection, the cost of obtaining information is extremely low, but the cost of screening is far beyond the cost of data collection. In the real management of the enterprise, for each application tool, you need to spend part of the cost to maintain, supervision and control it.
At the same time, the application of information systems, the Internet and other fast and inexpensive information transmission tools, have weakened the bargaining power of suppliers to a certain degree. On the other hand, the industry profit transparency also increased the bargaining power of suppliers. The dynamic balance between the two will be the common choice of downstream enterprises and suppliers to achieve “win-win”. But from another point of view, the network and information systems also reduce the cost of collecting information from customers, weakening the enterprise information advantage. At this time, the information system is beneficial for the customer, and it is not beneficial for the enterprise.
(4) The complexity of the organizational structure. The traditional management model, the information communication is more unidirectional. The networked communication structure provided by the information system, and the growth of information access capabilities, break the traditional barriers between departments, promote cross-sectoral information communication, and promote organizational decentralization, organizational responsiveness and enhanced overall performance. In particular, with the enhancement of information processing capabilities, the ability of senior managers to access information, centralized control as well as the efficiency continue to improve. Which also bring a problem that cannot be ignored, any department staff, can construct their own information communication network based on their own interests, hobbies and insights, rather than follow the communication system as the past and subject to hierarchical management system. Employees creates a direct dialogue through information technology with top management. However, such break of level often brings some new problems, there will be conflicts between new network organization and the original fixed management structure, multiple leadership problems also often made the flexibility of the enterprise destroyed.
7. State and explain the security and ethical issues may arise from the introduction of information systems in the business?
(1) The issues of identifying the authenticity of the data. In order to adapt to the uncertainty external environment of the information age, enterprises rely more and more on the real information. But at the same time, it is becoming more and more difficult to distinguish the genuine and false of the information (Peng, 2007). It is a universal phenomenon in the actual management that the objectivity of the information is destroyed, such as in the financial statements, the rumors, the false sales, and so on. Apart from the uncertainty of the information source, there could also be distortion in the transmission of the information which will make it hard to identify the false and genuine of the information. Some false information on the Internet has also been infiltrated on the traditional media, such as newspapers, television, magazines and so on. In front of massive data, how to identify the authenticity has become the most troublesome management problems. Whether it is managers or ordinary employees, it is needed to have the ability to identify the true and false information.
- The issue of Data retention and loss of. There is a substantial increase in electronic documents in information age, and the prominent feature of electronic files is that its carrier is fragile and unstable（Xiao, 2011). Rapid changes in the short term of the technical environment make it difficult for users d to understand and master this change in time, so there is risk in the choice of technology. Digital carrier information is also faced with the risk that cannot be read out. In addition, the emergence of many new technologies have provided new opportunities for crime and means. The computer virus has grown rapidly over the past 10 years, thousands of viruses has been found and documented. According to reports, the possibility of large companies get infected by the computer virus each year could reach to 50%. Although many companies now use anti-virus software, but the computer network increasing communication ability greatly increased the possibility of virus intrusion. These are potential risks in terms of data retention and loss and need corresponding changes.
- The issue in data security. One of the great achievements of contemporary information technology is the simplification of the transmission and sharing of digital information among many people (Kenneth, 2005). From the inherent nature of information, information can be shared, but it is meaningless if there is no restriction in sharing information. The consumption of data products is non-exclusive, and the consumption of each person does not exclude the consumption of others. Therefore, the creation of new thoughts, the preparation of procedures, the development of new products, and the idea is often in the threat of free occupation, such as the digital publishing market copyright issues. The security of data is becoming more and more important for the company’s operations. For enterprises, some core data, such as business documents, financial data, key customer data, technology research and development data, it is related to the efficiency of business operations, and even related to business survival of one enterprise.
Clearly, considering the dilemma Sherry is facing, the introduction of information system could help her a lot in the competitive market. While she also needs to pay attention to the managing risk within and outside the company, such as the data security issue. It is recommended that more training should be given to the employees and professional IT staff should be employed to help control the system.
When faced with the impact brought by information, the enterprises need to pay attention to retain or emphasize the human communication. The company also needs to pay attention to the managing risk within and outside the company, such as the data security issue. It is recommended that more training should be given to the employees and professional IT staff should be employed to help control the system.
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