1 / 58

ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

11. Chapter. ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM. OBJECTIVES. How can information systems help individual managers make better decisions when the problems are non-routine and constantly changing?

scout
Download Presentation

ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 11 Chapter ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

  2. OBJECTIVES • How can information systems help individual managers make better decisions when the problems are non-routine and constantly changing? • How can information systems help people working in a group make decisions more efficiently?

  3. OBJECTIVES • Are there any special systems that can facilitate decision-making among senior managers? Exactly what can these systems do to help high-level management? • What benefits can systems that support management decision-making provide for the organization as a whole?

  4. Decision-Making Level The four different decision-making constituencies in a firm are the following: • Senior management:is concerned with general timely info on changes in the industry and society at large that may affect both long-term andnear-term future of thefirm. • Middle Management and project teams: is concerned with specific, timely info about firm performance, including revenue and cost reduction targets • Operational Management and project teams: monitors the performance of each subunit of the firm and manages individual employees • Individual employees: try to fulfill the objectives of managers above them, following established rules and procedures for their routine activities

  5. Decision-Making Level Information Requirements of key Decision-Making Groups in a firm Unstructured Semistructured Structured Senior Management Middle Management Operational Management Individual Employees and Teams

  6. DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems • Unstructured decisions • Are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition • Semistructured decisions • Only part of the problem has a clear-cut answer provided by an accepted procedure • Structured decisions • Are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient

  7. Types of Decision-Support Systems • In general, structured decisions are made at lower organizational levels, • whereas unstructured decision making is more common at higher levels of the firm

  8. DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems Senior executives tend to be exposed to many unstructured decision situations that are open ended and evaluative and that require insight based on many sources of information and personal experience For example, a CEO in today’s music industry might ask, “Whom should we choose as a distribution partner for our online music catalog”? Answering this question would require access to WHAT … ? news, government reports, and industry views as well as high-level summaries of firm performance

  9. DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems Middle management and operational management tend to face more structured decision scenarios, but their decisions may include unstructured components For example, A typical middle-level management decision might be“Why is the order fulfillement report showing a decline over the last six months at a distribution center in Minnealoplis?” This middle manager could obtain a report from the firm’s enterprise system or distribution management system on order activity and operational efficiency at the Minneapolis distribution center. This is the structured part of the decision. WHERE IS THE UNSTRUCTURED PART OF THE DECISION HERE?

  10. DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems • Model-driven DSS • Primarily stand-alone • Uses model to perform “what-if” and other kinds of analysis • Ex: voyage-estimating system calculates financial (ship/time costs) and technical (ship cargo capacity, speed, port distances, etc…) voyage details • Data-driven DSS • Allows users to extract and analyze useful information from large databases • Ex: How many units of product number 403 were shipped in November 2004?

  11. DECISION-SUPPORT SYSTEMS (DSS) MIS and DSS • MIS • Provide info on the firm’s performance to help managers monitor and control the business • Provides reports based on routine flow of data • Assists in general control of the organization • Ex: A typical MIS report might show a summary of monthly sales

  12. DECISION-SUPPORT SYSTEMS (DSS) MIS and DSS • DSS • DSS support decisions in a different way. • Whereas MIS primarily address structured • problems, DSS support semistructured and • unstructured problem analysis • Emphasizes change, flexibility, rapid response, models, assumptions, ad hoc queries, and display graphics

  13. DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems • Datamining • Uses statistical analysis tools • Finds hidden patterns and relationships in large databases to infer rules • Knowledge discovery • events that are linked over time are referred to as sequences • Data mining can allow a firm to develop • specific marketing campaigns for different • customer segments

  14. DECISION-SUPPORT SYSTEMS (DSS) Overview of a Decision-Support System (DSS) Figure 11-2

  15. DECISION-SUPPORT SYSTEMS (DSS) Components of Decision-Support Systems • DSS database: collection of current or historical data • DSS software system: collection of software tools/mathematical and analytical models • User interface: easy interaction

  16. DECISION-SUPPORT SYSTEMS (DSS) Components of Decision-Support Systems • Model • Abstract representation illustrating components or relationships of a phenomenon • A model can be a physical model (airplane model), a mathematical model (equation), or a verbal model (description of a procedure for writing an order) • Optimization models, often using linear programming, determine optimal resource allocation to maximize or minimize specified variables such as cost or time

  17. Figure 11-3 DECISION-SUPPORT SYSTEMS (DSS) Sensitivity Analysis Sensitivity analysis Asks “what-if” questions repeatedly to determine the impact of change Ex: What happens if we raise the price by 5% or increase the advertising budget by $100,000?

  18. DECISION-SUPPORT SYSTEMS (DSS) DSS Applications and the Digital Firm • General Accident Insurance:Customer buying patterns and fraud detection • Bank of America:Customer profiles • Frito-Lay, Inc.:Price, advertising, and promotion selection

  19. DECISION-SUPPORT SYSTEMS (DSS) DSS for Customer Relationship Management • Uses data mining to guide decisions • Consolidates customer information into massive data warehouses • Uses various analytical tools to slice information into small segments

  20. DECISION-SUPPORT SYSTEMS (DSS) DSS for Customer Analysis and Segmentation Figure 11-4

  21. DECISION-SUPPORT SYSTEMS (DSS) DSS for Simulating Business Scenarios • Geographic Information Systems (GIS) • Software for analyzing and displaying data using digitized maps • Enhances planning and decision-making • Use data visualization technology

  22. DECISION-SUPPORT SYSTEMS (DSS) DSS for Simulating Business Scenarios Data Visualization • Helps users see patterns and relationships in large amounts of data that would be difficult to discern if the data were presented as traditional lists of text

  23. DECISION-SUPPORT SYSTEMS (DSS) Web-Based Customer Decision-Support Systems • Customer Decision-Support Systems (CDSS) • Support decision-making process of an existing or potential customer

  24. GROUP DECISION-SUPPORT SYSTEMS (GDSS) What Is a GDSS? • Interactive computer-based system • Facilitates solution to unstructured problems • Set of decision makers working together as a group • One problem with understanding the value of GDSS is their complexity.

  25. GROUP DECISION-SUPPORT SYSTEMS (GDSS) Characteristics of GDSS • Hardware:Conference facility, electronic hardware • Software tools:Tools for organizing ideas, gathering information, and ranking and seeking priorities • People:Participants, trained facilitator, staff supporting hardware and software

  26. EXECUTIVE SUPPORT IN THE ENTERPRISE • Executive Support Systems (ESS): • Information system at strategic level of an organization • Addresses unstructured decision-making through advanced graphics and communications

  27. GROUP DECISION-SUPPORT SYSTEMS (GDSS) The Role of Executive Support Systems in the Organization • Developing ESS: • Ease of use • Facility for environmental scanning • External and internal sources of information to be used for environmental scanning

  28. GROUP DECISION-SUPPORT SYSTEMS (GDSS) Benefits of Executive Support Systems • Analyzes, compares, and highlights trends • Provides greater clarity and insight into data • Speeds up decision-making

  29. 11 Chapter ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

  30. Multiple Choice Questions( 12 Questions) • Changes in the industry and society at large that may affect the long-term and near-term future of the firm is mainly concentrated at this management level: • Senior • Middle • Operational • Knowledge

  31. Multiple Choice Questions • Information density refers to the • A) richnesscomplexity and contentof a message. • B) total amount and quantity of information delivered to consumers by merchants. • C) total amount and quantity of information available to all market participants. • D) amount of information available to reduce price transparency. Answer: C

  32. Multiple Choice Questions • Once knowledge taxonomy is developed, documents are all ________ with the proper classification. • A) tagged • B) linked • C) tupled • D) referenced Answer: A

  33. Multiple Choice Questions Backward chaining is • A) a strategy for searching the rule base in an expert system that begins with information entered by the user. • B) the programming environment of an expert system. • C) a method of organizing expert system knowledge into chunks. • D) a strategy for searching the rule base in an expert system that begins with a hypothesis. Answer: D

  34. Multiple Choice Questions • Which of the following systems is NOT used to capture tacit knowledge? • A) expert system • B) case-based reasoning • C) fuzzy logic • D) neural network Answer: D

  35. Multiple Choice Questions • Decisions in which the decision maker must provide judgment, evaluation, and insights into the problem definition would be characterized as: • structured. • semistructured. • unstructured. • overt.

  36. Multiple Choice Questions • In data mining, events that are linked over time are referred to as: • associations. • sequences. • classifications. • clusters.

  37. Multiple Choice Questions • Data mining can allow a firm to develop: •  specific marketing campaigns for different customer segments. • intuitive user interfaces. • DSS based on the Web. • multiple distributed systems.

  38. Multiple Choice Questions • To make sure the system provides the information managers need, building successful DSSs requires: • data mining. • abstract decision processing. • data co-integration • a high-level of user participation.

  39. Multiple Choice Questions • Using a DSS involves several basic types of analytical models. If you wanted to cut advertising by $100 repeatedly so that you could see its relationship on sales, you would be using this model: • Sensitivity • Optimization • data visualization • "what-if"

  40. Multiple Choice Questions • GDSS consist of three basic elements: • software, conference rooms, and facilitators. • hardware, telecommunications, and facilitators. • hardware, software tools, and people. • software, telecommunications, and people.

  41. Multiple Choice Questions • One problem with understanding the value of GDSS is their: • availability and cost. • complexity. • need for organizational memory. • need for a facilitator.

  42. True-False Questions(6 Questions) • Operational management monitors the performance of each subunit of the firm and manages individual employees. •  True • False

  43. True-False Questions • Structured decisions require the decision maker to use judgment to analyze the problem.  • True •  False

  44. True-False Questions • The four phases of decision making are linear and once one phase is complete it is never returned to.  • True •  False

  45. True-False Questions • Data mining is more discovery-driven than traditional database queries.  • True •  False

  46. True-False Questions • Sequencing finds patterns in data to help managers estimate future value of continuous variables such as sales figures.  • True • False

  47. True-False Questions • An online syndicator aggregates content or applications from multiple sources, packaging them for distribution, and reselling them to third-party Web sites. • Answer: TRUE

  48. True-False Questions • Companies rarely use Web pages to analyze customer information. Answer: FALSE

  49. True-False Questions • Some Net marketplaces support contractual purchasing based on long-term relationships with designated suppliers. • Answer: TRUE

  50. True-False Questions • Knowledge is universally applicable and easily moved. • Answer: FALSE

More Related