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Information Technology Text Book
Importance of Information
The ability to manage information plays a crucial part in business success. Successful
organisations understand their customers and their own activities. They keep up to date
with market chances, anticipate future developments and keep stakeholders well
informed. By comparison unsuccessful organisations are slow to find out what is
happening, do not communicate effectively and make poor decisions based on poor
Information technology plays a vital role in management of information and the way in
which it is used can provide a firm with a competitive advantage. Information technology
(IT) involves the use of electronic means to help managers to gather, transmit and
interpret information internally and externally. For example word processors,
spreadsheets, databases, bar codes scanners, emails and the Internet. The Internet can
help people find information quickly and provide more reliable sources of data. Managers
who have goods access to information will benefit from being better informed and
making better decisions than rivals, this is why many firms devote resources to the
management of information. There are numerous ways in which IT can be used
It can be used to monitor customer buying. Firms can trace what particular
customers buy and which products lines are selling well. The use of information on
customer's can build up an ongoing understanding of what and when individuals
buy. In some cases firms can build up such an effective profile on customers that
they can tailor make a service for each one, e.g. provide recommendations for
other products etc. the process of building and updating a profile of each
customer is called customer relationship management.
IT can also be used to improve communications within a firm. This enables better
decision making as managers can get the information they want when they want
it. Intranets, emails and faxes all move information around the firm more easily;
spreadsheets and databases enable information to be processed more quickly.
Management Information Systems (MIS) are IT systems developed to help
managers access information more readily e.g. an MIS might help managers to
quickly look up sales data or sales trends.
IT may also improve motivation as employees feel they can access the people they
need to get a decision more easily and generally feel more involved in what's
Information Technology and Operations
The use of IT can have a significant impact on a firm's operations, enabling managers to
produce more efficiently and providing greater flexibility.
The use of Computer Aided Design (CAD) and Computer Aided Manufacture
(CAD) for example can lead to more versatile and less wasteful production; it can
therefore be an important element of a lean production approach. IT also enables
designers and engineers to undertake simultaneous engineering speeding up the
development process and enabling firms to get new products to the market and
new processes up and running before the competition.
Within the purchasing function and increasing number of firms are using
web-based exchange systems for their purchases. By using the Internet firms
can quickly compare prices and specifications from a range of suppliers to find
the best deal. This can reduce costs and speed up the buying process.
IT can also improve stock control; the use of scanners within shops, for example,
enables firms to know immediately what their stock levels are, reducing the need
for as many manual checks. Also firms can use this system to automatically
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With good IT links between a firm and its suppliers it is much
easier to adopt a JIT system.
Information Technology and Planning
Rapid developments in IT have enabled firms to process data much more quickly and
much more cheaply than in the past. This enables quicker and hopefully more accurate
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The importance of information can be seen by the fact that
several organisations have appointed `knowledge managers' to manage the way
information is gathered and distributed throughout the organisation. IT can play an
important role in this.
Problems of Information Technology
The greater use of IT does not in itself solve a firm's problems. While it provides the
opportunity for firms to manage information more effectively, its value depends on
several factors.…read more
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While the Internet offers firms new promotional and distribution opportunities it also
provides customers with the ability to rapidly search for alternatives and easily compare
prices. This is likely to put downward pressure on firm's profit margins.
The impact on the Internet on a particular business will depend on how managers react
to it and whether they can exploit its opportunities before others do.…read more