Business Decision Business Decision MakingMaking

BDM is a process by which an BDM is a process by which an organization manages large organization manages large amounts of data, extracting amounts of data, extracting useful information, and useful information, and turning that information turning that information into knowledge upon which into knowledge upon which actions can be taken. actions can be taken.

BDM is a broad category of BDM is a broad category of application programs and application programs and technologies for gathering, technologies for gathering, storing, analyzing, and storing, analyzing, and providing access to data to providing access to data to help enterprise users make help enterprise users make better business decisions. better business decisions.

How good decisions are How good decisions are made?made?

• Personal expertise of the mangerPersonal expertise of the manger• ConsultationConsultation• Decisions must be made on actual facts Decisions must be made on actual facts and figuresand figures

• Give a closer look to the problematic Give a closer look to the problematic situationsituation

• List your optionsList your options• Implement your decision wholeheartedly Implement your decision wholeheartedly and joyfullyand joyfully

• Evaluate your decisionEvaluate your decision

Decision making occurs at Decision making occurs at all levels of a businessall levels of a business

• The Board of Directors may make the grand The Board of Directors may make the grand strategic decisions about investment and strategic decisions about investment and direction of future growth.direction of future growth.

• Managers may make the more tactical Managers may make the more tactical decisions about how their own department decisions about how their own department may contribute most effectively to the may contribute most effectively to the overall business objectives. overall business objectives.

• Ordinary employees are increasingly Ordinary employees are increasingly expected to make decisions about the expected to make decisions about the conduct of their own tasks, responses to conduct of their own tasks, responses to customers and improvements to business customers and improvements to business practice. practice.

Types of decision makingTypes of decision making• 1. Programmed Decisions 1. Programmed Decisions These are standard These are standard decisions which always follow the same decisions which always follow the same routine. As such, they can be written down routine. As such, they can be written down into a series of fixed steps which anyone into a series of fixed steps which anyone can follow. They could even be written as can follow. They could even be written as computer program.computer program.

• 2. Non-Programmed Decisions. 2. Non-Programmed Decisions. These are non-These are non-standard and non-routine. Each decision is standard and non-routine. Each decision is not quite the same as any previous decision.not quite the same as any previous decision.

• 3. Strategic Decisions.3. Strategic Decisions. These affect the  These affect the long-term direction of the business e.g. long-term direction of the business e.g. whether to take over Company A or Company B.whether to take over Company A or Company B.

• 4. Tactical Decisions.4. Tactical Decisions. These are  These are medium-term decisions about how to medium-term decisions about how to implement strategy e.g. what kind of implement strategy e.g. what kind of marketing to have, or how many extra marketing to have, or how many extra staff to recruitstaff to recruit

• 5. Operational Decisions.5. Operational Decisions. These are  These are short-term decisions (also called short-term decisions (also called administrative decisions) about how administrative decisions) about how to implement the tactics e.g. which to implement the tactics e.g. which firm to use to make deliveries.firm to use to make deliveries.

Internal Constraints on Internal Constraints on Decision-MakingDecision-Making

• Availability of finance.Availability of finance. Certain  Certain decisions will be rejected because they decisions will be rejected because they cost too much.cost too much.

• Existing Business Policy.Existing Business Policy. It is not  It is not always practical to re-write business always practical to re-write business policy to accommodate one decision.policy to accommodate one decision.

• People’s abilities and feelings.People’s abilities and feelings. A  A decision cannot be taken if it assumes decision cannot be taken if it assumes higher skills than employees actually higher skills than employees actually have, or if the decision is so have, or if the decision is so unpopular no-one will work properly on unpopular no-one will work properly on it.it.

Internal Constraints on Internal Constraints on Decision-MakingDecision-Making

• Availability of finance.Availability of finance. Certain  Certain decisions will be rejected because they decisions will be rejected because they cost too much.cost too much.

• Existing Business Policy.Existing Business Policy. It is not  It is not always practical to re-write business always practical to re-write business policy to accommodate one decision.policy to accommodate one decision.

• People’s abilities and feelings.People’s abilities and feelings. A  A decision cannot be taken if it assumes decision cannot be taken if it assumes higher skills than employees actually higher skills than employees actually have, or if the decision is so have, or if the decision is so unpopular no-one will work properly on unpopular no-one will work properly on it.it.

External Constraints on External Constraints on Decision-MakingDecision-Making

•   National & International National & International legislationlegislation

• Competitors’ behaviorCompetitors’ behavior, and , and their likely response to their likely response to decisions your business makesdecisions your business makes

• Lack of technologyLack of technology• Economic climateEconomic climate• WeatherWeather

Good decision-making comes Good decision-making comes from:-from:-

1)1)Training of managers in decision-Training of managers in decision-making skills. making skills.

2)2)Good information in the first place.Good information in the first place.3)3)Management skills in analyzing Management skills in analyzing information and handling its information and handling its shortcomings.shortcomings.

4)4)Experience and natural ability in Experience and natural ability in decision-making.decision-making.

5)5)Risk and attitudes to risk.Risk and attitudes to risk.

6)6) Human factors. People are people. Emotional Human factors. People are people. Emotional responses come before rational responses, responses come before rational responses, and it is very difficult to get people to and it is very difficult to get people to make rational decisions about things they make rational decisions about things they feel very strongly about. People simply feel very strongly about. People simply take different views on the same facts, and take different views on the same facts, and people also simply make mistakes.people also simply make mistakes.

7)7) Businesses are highly interdependent on Businesses are highly interdependent on each other, their suppliers and their each other, their suppliers and their customers. Decisions are not taken in customers. Decisions are not taken in isolation. The effects of any decision will isolation. The effects of any decision will depend critically on the reactions of other depend critically on the reactions of other groups in the market. These have to be, as groups in the market. These have to be, as far as possible, taken into account before far as possible, taken into account before decisions are made.decisions are made.

Methods of data Methods of data collectioncollection

1) 1) Primary data:Primary data: Primary data are Primary data are those which are collected for those which are collected for the first time, and thus the first time, and thus happens to be original in happens to be original in nature. There are several nature. There are several methods of collecting primary methods of collecting primary data, particularly in surveys data, particularly in surveys and descriptive researchers. and descriptive researchers. Important ones are:Important ones are:

a) Observation method:a) Observation method: The observational method is the most The observational method is the most commonly used, specially in studies commonly used, specially in studies relating to behavioral sciences. Under relating to behavioral sciences. Under the observation method, the information the observation method, the information is sought by way of investigator’s own is sought by way of investigator’s own direct observation without asking direct observation without asking anything from the respondent. For anything from the respondent. For instance, in a study relating to instance, in a study relating to consumer behavior, the investigator consumer behavior, the investigator instead of asking the brand of wrist instead of asking the brand of wrist watch used by the respondent , may watch used by the respondent , may himself look at the watch.himself look at the watch.

b) Interview Method:b) Interview Method: The interview method of The interview method of collecting data involves collecting data involves presentation of oral, verbal presentation of oral, verbal stimuli and reply in terms of stimuli and reply in terms of oral-verbal responses.oral-verbal responses.

c) Questionnaire Methodc) Questionnaire Method This method of data collection is This method of data collection is quite popular in particularly big quite popular in particularly big enquiries. It is being adopted by enquiries. It is being adopted by private individuals, research workers, private individuals, research workers, private and public organizations and private and public organizations and even by governments. In this method a even by governments. In this method a questionnaire is sent (or given) to the questionnaire is sent (or given) to the persons concerned with a request to persons concerned with a request to answer the questions. A questionnaire answer the questions. A questionnaire consists of a no of questions printed consists of a no of questions printed in a definite order.in a definite order.

2) Secondary data2) Secondary data The secondary data are those which The secondary data are those which

have already been collected by someone have already been collected by someone else and which have already been else and which have already been passed through some statistical passed through some statistical process. Sources of secondary data may process. Sources of secondary data may either be published data or either be published data or unpublished data. Usually published unpublished data. Usually published data are available in: data are available in:

a)a) Various publication of the central, Various publication of the central, state & local government.state & local government.

b)b) Various publication of foreign Various publication of foreign governments or international bodies.governments or international bodies.

c) Trade journals.c) Trade journals.d) Books, magazines and d) Books, magazines and newspapers.newspapers.

e) Research papers & articles.e) Research papers & articles.f) Thesis & dissertations.f) Thesis & dissertations.g) Financial databases.g) Financial databases.

SamplingSampling A A samplesample is a subset, or some part is a subset, or some part of a larger whole. A larger whole of a larger whole. A larger whole could be anything out of which sample could be anything out of which sample is taken. The whole could be anything is taken. The whole could be anything about which a study is to be about which a study is to be conducted. A complete group of conducted. A complete group of entities sharing some common set of entities sharing some common set of characteristics is characteristics is populationpopulation. The . The process of using a small no of items process of using a small no of items or parts of a larger population to or parts of a larger population to make conclusions about the whole make conclusions about the whole population is called population is called samplingsampling..

Why sample?Why sample?• Saves cost, labor and time.Saves cost, labor and time.• Quality Management/supervision.Quality Management/supervision.• Accurate and reliable results.Accurate and reliable results.• Sampling may be the only way.Sampling may be the only way.• Determine the period of study.Determine the period of study.

Different types of Different types of sampling techniquessampling techniques

Broadly speaking there are two Broadly speaking there are two different types of sampling different types of sampling techniques:techniques:

1)1) Non probability samplingNon probability sampling2)2) Probability samplingProbability sampling

Non probability samplingNon probability samplingIt is the process in which the personal It is the process in which the personal

judgment determines which units of judgment determines which units of the population are to be selected the population are to be selected for a sample. Different types of non for a sample. Different types of non probability sampling techniques are:probability sampling techniques are:

a)a) Quota samplingQuota samplingb)b) Purposive samplingPurposive samplingc)c) Convenience sampling Convenience sampling d)d) Snowball samplingSnowball sampling

a) Quota Samplinga) Quota SamplingIn quota sampling the interviewer is In quota sampling the interviewer is instructed to interview a certain no of instructed to interview a certain no of people with specific characteristics.people with specific characteristics.

The quotas are chosen so that the overall The quotas are chosen so that the overall sample will reflect accurately the known sample will reflect accurately the known population characteristics in a no of population characteristics in a no of aspects.aspects.

For example, interviewers may be told to For example, interviewers may be told to interview, over a period of several days, interview, over a period of several days, fifty people divided into age and socio-fifty people divided into age and socio-economic groups to ask them their opinion economic groups to ask them their opinion about a specific television drama. about a specific television drama.

b) Purposive Samplingb) Purposive Sampling In this method personal judgment In this method personal judgment plays an important role in the plays an important role in the selection of sample elements. The selection of sample elements. The samples are selected in accordance samples are selected in accordance with the purpose in mind. For example, with the purpose in mind. For example, a researcher is interested in studying a researcher is interested in studying students who are enrolled in a course students who are enrolled in a course on research methods, are highly on research methods, are highly regular, are frequent participants in regular, are frequent participants in the class discussions and often come the class discussions and often come with new ideas.with new ideas.

c) Convenience Samplingc) Convenience Sampling Convenience sampling refers to Convenience sampling refers to sampling by obtaining units or sampling by obtaining units or people who are most people who are most conveniently available. For conveniently available. For example, it may be convenient example, it may be convenient and economical to sample and economical to sample employees in companies in a employees in companies in a nearby area, sample from a pool nearby area, sample from a pool of friends and neighbors.of friends and neighbors.

d) Snowball Samplingd) Snowball SamplingSnowball sampling is a method for Snowball sampling is a method for identifying and selecting cases in identifying and selecting cases in a network. It is based on the a network. It is based on the analogy to a snowball, which begins analogy to a snowball, which begins small but larger as it is rolled on small but larger as it is rolled on wet snow and picks up additional wet snow and picks up additional snow. It begins with one or few snow. It begins with one or few people or cases and spreads out on people or cases and spreads out on the basis of links to the initial the basis of links to the initial cases.cases.

Probability SamplingProbability SamplingThis is the method of selecting samples in This is the method of selecting samples in

which each sampling unit of the population which each sampling unit of the population has a known and non-zero probability of has a known and non-zero probability of being selected in the sample.being selected in the sample.

In probability sampling we deals with:In probability sampling we deals with:a)a) Simple random samplingSimple random samplingb)b) Stratified random samplingStratified random samplingc)c) Systematic samplingSystematic samplingd)d) Cluster samplingCluster samplinge)e) Multi stage samplingMulti stage sampling

a) Simple Random a) Simple Random SamplingSampling

It is a simple technique of It is a simple technique of selecting a sample. It is applied selecting a sample. It is applied to the population when it contains to the population when it contains homogenous material. In simple homogenous material. In simple random sampling each & every unit random sampling each & every unit of the population has an equal of the population has an equal probability of its being included probability of its being included in the sample. Random samples can in the sample. Random samples can be drawn by a lottery system or be drawn by a lottery system or using random no table.using random no table.

b) Stratified Random b) Stratified Random SamplingSampling

This is a form of random sampling in which all the This is a form of random sampling in which all the people or items in the sampling frame are people or items in the sampling frame are divided into groups or categories which are divided into groups or categories which are mutually exclusive (that is, a person or unit mutually exclusive (that is, a person or unit can be in one group only) these groups are can be in one group only) these groups are called ‘strata’. Within each strata samples are called ‘strata’. Within each strata samples are selected using simple random sampling selected using simple random sampling techniques.techniques.

For example, in a marketing survey the sales of For example, in a marketing survey the sales of cigarettes in a variety of outlets may be cigarettes in a variety of outlets may be investigated by dividing the retail outlets into investigated by dividing the retail outlets into strata. In a particular town shops may be strata. In a particular town shops may be divided into large, medium and small outlets and divided into large, medium and small outlets and a simple random sample is taken from each a simple random sample is taken from each strata. strata.

c) Systematic Samplingc) Systematic SamplingThis is a form of random sampling involving a This is a form of random sampling involving a system. The sampling frame is taken and a system. The sampling frame is taken and a name or unit is chosen at random. Then from name or unit is chosen at random. Then from this chosen name or unit every nthis chosen name or unit every nthth item is item is selected through out the list.selected through out the list.

For example, if the sampling frame contains For example, if the sampling frame contains 100,000 names and a 2% sample is required, 100,000 names and a 2% sample is required, the 2000 names can be selected at regular the 2000 names can be selected at regular intervals. The first is selected at random intervals. The first is selected at random form the first 50 names (50 because 50 x form the first 50 names (50 because 50 x 2000=100,000). If the 352000=100,000). If the 35thth name is picked name is picked the names are selected at regular intervals the names are selected at regular intervals to makeup 2000 in all (the 35to makeup 2000 in all (the 35thth,, 85 85thth , ……..) , ……..)

d) Cluster sampling d) Cluster sampling In cluster sampling (or area In cluster sampling (or area sampling) clusters are formed by sampling) clusters are formed by breaking down the area to be breaking down the area to be surveyed into smaller areas, a few surveyed into smaller areas, a few of these areas are then selected by of these areas are then selected by random methods and units (such as random methods and units (such as individuals or households) are individuals or households) are interviewed in these selected interviewed in these selected areas. The units are selected by areas. The units are selected by random methods.random methods.

Different b/w cluster & Different b/w cluster & stratastrata

A group of dissimilar elements of a A group of dissimilar elements of a statistical population constitute a cluster. statistical population constitute a cluster. Whereas a group containing individuals of Whereas a group containing individuals of the same interest is called strata.the same interest is called strata.

For example, all the colleges (boys, girls) For example, all the colleges (boys, girls) administrated by Peshawar University form a administrated by Peshawar University form a cluster while only girls colleges make a cluster while only girls colleges make a strata.strata.

Different clusters may be similar in Different clusters may be similar in characteristics whereas there must be characteristics whereas there must be complete heterogeneity among different complete heterogeneity among different strata.strata.

e) Multi stage Samplinge) Multi stage SamplingIn this sampling the population is In this sampling the population is divided into a no of stages. In first divided into a no of stages. In first stage sampling units are sampled by a stage sampling units are sampled by a suitable method such as simple random suitable method such as simple random sampling or stratified random sampling. sampling or stratified random sampling. The selected units are then divided The selected units are then divided into 2into 2ndnd stage and a sample is taken stage and a sample is taken again by a suitable method, the again by a suitable method, the selected 2selected 2ndnd stage units can further be stage units can further be sub divided into 3sub divided into 3rdrd stage, which are stage, which are again to be sampled and so on.again to be sampled and so on.

For example, in a population For example, in a population survey of KPK province we survey of KPK province we select select nn11 divisions and draw a divisions and draw a sample of sample of nn22 districts from districts from nn11 divisions. Again we draw ndivisions. Again we draw n33 villages from villages from nn22 districts and districts and again we draw nagain we draw n44 households from households from nn33 villages. villages.

Guidelines for Guidelines for Questionnaire DesignQuestionnaire Design

1. 1. Questionnaire Relevancy:Questionnaire Relevancy: A A questionnaire is relevant if no questionnaire is relevant if no unnecessary information is unnecessary information is collected and if the collected and if the information that is needed to information that is needed to solve the problem.solve the problem.

2. 2. Questionnaire Questionnaire Accuracy:Accuracy:

Once the researcher has decided what Once the researcher has decided what should be asked, the criterion of should be asked, the criterion of accuracy becomes of primary concern. accuracy becomes of primary concern. Accuracy means that the information is Accuracy means that the information is reliable and valid. For example, in reliable and valid. For example, in survey respondents can probably tell survey respondents can probably tell the interviewer whether they are the interviewer whether they are married, single, divorced, separated married, single, divorced, separated or widowed, but providing their or widowed, but providing their “marital status” may present a “marital status” may present a problem.problem.

3. 3. Avoid Ambiguity & Avoid Ambiguity & Confusion:Confusion:

Ambiguity occurs when we use Ambiguity occurs when we use indefinite words or response indefinite words or response categories in the questions. A categories in the questions. A good example of ambiguous good example of ambiguous question is “What is your question is “What is your income?” could mean weekly, income?” could mean weekly, monthly or annual income.monthly or annual income.

4. 4. Avoid double barreled Avoid double barreled Questions:Questions:

Make each question about one Make each question about one and only one. A double barreled and only one. A double barreled question consists of two or question consists of two or more questions joined together. more questions joined together. It makes the respondent’s It makes the respondent’s answer ambiguous. For example, answer ambiguous. For example, if asked, “Does this company if asked, “Does this company have pension and health have pension and health insurance benefits?” insurance benefits?”

5. 5. Avoid Loaded Avoid Loaded Questions:Questions:

Loaded questions suggest a socially Loaded questions suggest a socially desirable answer or emotionally charged. desirable answer or emotionally charged. “Should the city government repair all “Should the city government repair all the broken streets?”. Most of the people the broken streets?”. Most of the people are going to agree with this question are going to agree with this question simply because this is highly socially simply because this is highly socially desirable. A question which may be desirable. A question which may be challenging the traditionally set challenging the traditionally set patterns of behavior may be considered patterns of behavior may be considered as emotionally charged i.e. it is loaded as emotionally charged i.e. it is loaded with such material which may hit the with such material which may hit the emotions of the people.emotions of the people.

6. 6. Avoid Burdensome Avoid Burdensome Questions that may Questions that may

challenge the respondent’s challenge the respondent’s memorymemoryA simple fact of human life is that A simple fact of human life is that

people forget. Researchers writing people forget. Researchers writing questions about past behavior or questions about past behavior or events should recognize that events should recognize that certain questions may make serious certain questions may make serious demand on the respondent’s memory. demand on the respondent’s memory. “How did you feel about your “How did you feel about your brother when you were 6 years old?” brother when you were 6 years old?” It may very difficult to recall It may very difficult to recall something from the childhood.something from the childhood.

7. 7. Arrange Questions in a Arrange Questions in a Proper Sequence:Proper Sequence:

If the opening questions are If the opening questions are interesting, simple to interesting, simple to comprehend, and easy to answer, comprehend, and easy to answer, respondent’s cooperation and respondent’s cooperation and involvement can be maintained involvement can be maintained throughout the questionnaire.throughout the questionnaire.

8. 8. Layout of the Layout of the questionnaire:questionnaire:

Good layout and physical Good layout and physical appearance is also very appearance is also very important. It is positively important. It is positively correlated with the correlated with the respondent’s involvement in respondent’s involvement in completing the questionnaire.completing the questionnaire.

Types of Data SetsTypes of Data Sets• Individual series:Individual series: When the When the observations on a single are observations on a single are given.given.

• Discrete data:Discrete data: When observations When observations with their respective frequencies with their respective frequencies are given.are given.

• Grouped or Continuous data:Grouped or Continuous data: When When groups and frequencies are given.groups and frequencies are given.

Measures of Central Measures of Central TendencyTendency

Any data set can be summarized in a Any data set can be summarized in a single value. Such a value is usually single value. Such a value is usually some where in the centre of a data and some where in the centre of a data and it represents the entire data set. This it represents the entire data set. This single value is known as central value. single value is known as central value. Two points should be noted. First, a Two points should be noted. First, a measure of central tendency should be measure of central tendency should be some where within the range of the data some where within the range of the data and secondly, it should remain and secondly, it should remain unchanged by a rearrangement of the unchanged by a rearrangement of the values in a different order.values in a different order.

Different measures of Different measures of Central TendencyCentral Tendency

• Arithmetic MeanArithmetic Mean• ModeMode• MedianMedian• Quartiles, Deciles & Quartiles, Deciles & PercentilesPercentiles

Arithmetic MeanArithmetic MeanThe arithmetic mean or simply The arithmetic mean or simply is the most familiar average. is the most familiar average. It is defined as the value It is defined as the value obtained by dividing the sum obtained by dividing the sum of all observations by their of all observations by their respective number of respective number of observations.observations.

Advantages of Arithmetic Advantages of Arithmetic MeanMean

• It is based on all the observations It is based on all the observations in a data.in a data.

• It is easy to calculate and simple It is easy to calculate and simple to comprehend.to comprehend.

• It is determined for almost every It is determined for almost every kind of data.kind of data.

• It is a relatively stable statistic It is a relatively stable statistic with the fluctuations of sampling. with the fluctuations of sampling. That is why it is universally used.That is why it is universally used.

Disadvantages of Disadvantages of Arithmetic MeanArithmetic Mean

• It is greatly affected by extreme It is greatly affected by extreme values in the data.values in the data.

• It sometimes gives misleading It sometimes gives misleading conclusions.conclusions.

• In a highly skewed distribution, the In a highly skewed distribution, the mean is not an appropriate measure of mean is not an appropriate measure of average.average.

• If the grouped data have “open end” If the grouped data have “open end” classes, mean cannot be calculated classes, mean cannot be calculated without assuming the limits.without assuming the limits.

Management Information Management Information SystemSystem

Objectives of the chapter:Objectives of the chapter:• Appreciate the information requirements of a Appreciate the information requirements of a range of organizations.range of organizations.

• Be able to identify information processing tools Be able to identify information processing tools for operational, tactical and strategic levels of for operational, tactical and strategic levels of the organization.the organization.

• Know the main features of different types of Know the main features of different types of management information system (MIS) and management information system (MIS) and appreciate the various IT systems that deliver appreciate the various IT systems that deliver information to different levels in the information to different levels in the organization (e.g. Transaction Processing, organization (e.g. Transaction Processing, Decision Support and Executive Information/ Decision Support and Executive Information/ Support Systems)Support Systems)

• Understand how databases and planning Understand how databases and planning models help the strategic planning models help the strategic planning process (e.g. external databases, process (e.g. external databases, economic models, forecasting and economic models, forecasting and modeling packages/applications).modeling packages/applications).

What is information used for?What is information used for? Data is the raw material for data Data is the raw material for data processing. It consists of numbers, processing. It consists of numbers, letters and symbols and relates to letters and symbols and relates to facts, events and transactions. facts, events and transactions. Information is data that has been Information is data that has been processed in such a way as to be processed in such a way as to be meaningful to the person who receives meaningful to the person who receives it.it.

All organizations require information for All organizations require information for a range of purposes. These can be a range of purposes. These can be categorized as follows:categorized as follows:

a)a)Planning:Planning: Planning requires a knowledge of Planning requires a knowledge of the available resources, possible time-the available resources, possible time-scales and the likely outcome under scales and the likely outcome under alternative scenarios. Information is alternative scenarios. Information is required that helps decision making and required that helps decision making and how to implement decisions taken.how to implement decisions taken.

b)b)Controlling:Controlling: Once a plan is implemented Once a plan is implemented its actual performance must be controlled. its actual performance must be controlled. Information is required to assess whether Information is required to assess whether it is proceeding as planned or whether it is proceeding as planned or whether there is some unexpected deviation from there is some unexpected deviation from plan. It may consequently be necessary to plan. It may consequently be necessary to take some form of corrective action.take some form of corrective action.

c)c)Recording Transactions:Recording Transactions: Information about each transaction Information about each transaction or event is required. Reasons or event is required. Reasons include:include:

i.i.Documentation of transactions can Documentation of transactions can be used as evidence in a case of be used as evidence in a case of dispute.dispute.

ii.ii.There may be a legal requirement There may be a legal requirement to record transactions for example to record transactions for example for accounting and audit purposes.for accounting and audit purposes.

iii.iii.Operational information can be Operational information can be built up, allowing control action built up, allowing control action to be taken.to be taken.

d)d)Performance Management:Performance Management: Just as Just as individual operations need to be individual operations need to be controlled, so overall controlled, so overall performance must be measured. performance must be measured. Comparisons against budget or Comparisons against budget or plan are able to be made. This plan are able to be made. This may involve the collection of may involve the collection of information on for example information on for example costs, revenue, volumes, time-costs, revenue, volumes, time-scale and profitability.scale and profitability.

e)e)Decision Making:Decision Making: Good Good information should lead to information should lead to better informed decisions.better informed decisions.

What is an MIS?What is an MIS?• A management information system (MIS) A management information system (MIS) converts data from internal and external converts data from internal and external sources into information and communicates sources into information and communicates that information in an appropriate form to that information in an appropriate form to managers at all levels. This enables them managers at all levels. This enables them to make timely and effective decisions for to make timely and effective decisions for planning, directing and controlling the planning, directing and controlling the activities for which they are responsible.activities for which they are responsible.

• A computer system or related group of A computer system or related group of systems which collects and presents systems which collects and presents management information to a business in management information to a business in order to facilitate control.order to facilitate control.

What is a project?What is a project?A project is “an understanding A project is “an understanding that has a beginning and an end that has a beginning and an end and is carried out to meet and is carried out to meet established goals within cost, established goals within cost, schedule and quality schedule and quality objectives”.objectives”.

Network AnalysisNetwork AnalysisNetwork analysis is a technique for Network analysis is a technique for planning and controlling large projects, planning and controlling large projects, such as construction work, research and such as construction work, research and development projects or the development projects or the computerization of business systems. computerization of business systems. Network analysis helps managers to plan Network analysis helps managers to plan when to start various tasks, to allocate when to start various tasks, to allocate resources so that the tasks can be carried resources so that the tasks can be carried out within schedule, to monitor actual out within schedule, to monitor actual progress and to find out when control progress and to find out when control action is needed to prevent a delay in action is needed to prevent a delay in completion of the project.completion of the project.

Network Analysis Network Analysis (Contd.)(Contd.)

The events and activities making up The events and activities making up the whole project are represented the whole project are represented in the form of a diagram or chart. in the form of a diagram or chart. Network analysis is sometimes Network analysis is sometimes called Critical Path Analysis (CPA) called Critical Path Analysis (CPA) or Critical Path Method (CPM).or Critical Path Method (CPM).Network Analysis is basically concerned Network Analysis is basically concerned with the deployment of available resources with the deployment of available resources for the completion of a complex task.for the completion of a complex task.

Critical Path Method Critical Path Method (CPM)(CPM)

The critical path is the path through the network The critical path is the path through the network with the greatest total duration.with the greatest total duration.The time needed to complete each The time needed to complete each individual activity in a project must be individual activity in a project must be estimated. This time is shown on the estimated. This time is shown on the network above or below the line network above or below the line representing the activity. The duration representing the activity. The duration of the whole project will be fixed by of the whole project will be fixed by the time taken to complete the path the time taken to complete the path through the network with the greatest through the network with the greatest total duration.total duration.