5.9 Management Information systems (HL)

Question 1

an information system (IS)

Answer 1

refers to computerized tools and systems that gather, organize, analyse, and manage data to help businesses with decision-making. It’s an “umbrella” term covering all forms of digital information systems used to handle and analyse data, aiming to improve managerial decision-making processes.

Question 2

example case of an information system (IS)

Answer 2

For example, a business might hold data from its customers and record them in “files” that need to be protected (username and password) in order to protect customers personal details. This is a simple way of IS.
However, nowadays we have more sophisticated software to gather data mainly used by large companies, especially with the growth of e-commerce. These processes help companies with data mining and data analytics.

Question 3

data mining

Answer 3

this refers to the process of finding trend, patterns and correlations with large data bases. This data is used for predictive analysis and forecasting purposes.

Question 4

origins of the term data mining

Answer 4

originates from the mining industry, where precious materials are extracted from digging earth and rock. Similarly, in relation to information technology, data mining involves sorting out extensive datasets to obtain valuable information.

Question 5

process of data mining

Answer 5

The process of data mining always starts with a “hypothesis” that needs to be tested. For example, the marketing team might present an idea that customers buy more of a product in a specific time compared to a different one. To prove this, the marketing team can use data mining.

Question 6

data analytics

Answer 6

shares many characteristics with data mining such as finding trends, patterns and correlations. However, Data analyticsis the management process of examining and scrutinising raw data to find meaningful trends and patterns to support decision making and business planning. Basically, analysing the data!

Question 7

three ways in which data analytics can be used

Answer 7

Descriptive analytics - using data from past performance
Predictive analytics – helps forecasting the future
Prescriptive analytics – using both Descriptive analytics and Predictive analytics, it is used to determine (prescribe) an optimal course of action in the future.

Question 8

how can data mining and data analytics be used

Answer 8

a retail chain uses data mining and analytics to optimize operations and enhance customer experience

Question 9

customer segmentation in relation to a retail chain

Answer 9

Using data mining techniques, the retail chain can segment its customer base based on various attributes such as purchasing behaviour, demographics, and geographic location.

Question 10

price optimisation in relation to a retail chain

Answer 10

Data analytics can help the retail chain optimize pricing strategies to maximize profitability. By analysing competitor pricing, demand elasticity, and customer willingness to pay, the company can dynamically adjust prices for products to maximize revenue while remaining competitive in the market

Question 11

personalised recommendations in relation to a retail chain

Answer 11

Through data mining algorithms, the retail chain can analyse customer purchase history and browsing behaviour to generate personalized product recommendations. Therefore, the customers are more like to keep buying for the retail chain.

Question 12

managing/monitoring employees in relation to

Question 13

what is ecommerce

Answer 13

thetrade of goods and services using the internet.

Question 14

benefits of E-commerce for a business

Answer 14

• Firms can sell their products 24 hours a day anywhere in the world.Hence, reach a wider market.
• Firms canrespond to competitors faster, such as changing the price.
• Less packagingto reduce waste and production costs.
• The firm saves on overheadssuch as rent, storage, insurance payment and staffing costs of physical stores. This in turn reduces the price of the product for consumers. The firms also save onoperating costs.
• It is a better cost-effective method of advertisings a product, compared to TV for example.

Question 15

costs of E-commerce for a business

Answer 15

• There can behigh set-up costsfor professional websites and marketing, as well aspayment systems.
• There arefinance chargesfor using the services of credit card companies, which will increase the costs for the business.
• There is risk offraudulent trade, which can cause losses for the customer, business or financial institutions
• Firms may be exposed to competitors who take advantage of the products details available online
• Running costs may be high for postage and packaging.

Question 16

benefits of e-commerce for customers

Answer 16

• Customers can shop online, and don’t have to physically go to the store. Most people these days have access to internet.
• Greaterchoice and conveniencefor the customers. They can easily compare various products before deciding which one to purchase.
• Transactions are much faster. Customers can quickly find a product and place their order.

Question 17

costs of e-commerce for customers

Answer 17

• Customers may find it time-consuming, difficult or boring. Especially when the customer needs to see the product before they purchase it. There is also a time-lag between purchase and delivery, as well as increased difficulty to return faulty products.
• Customers may suffer from information overloadfrom the number of websites on the internet, preferring to visit physical stores.
• The technology to sustain e-commerce isnot available in all countries or to all businesses. The sites need to beupdated regularly, but must be easy for customers to access, leading to high maintenance costs.
• The internet isvolatile, prone to hackers and breakdowns.

Question 18

cyber crime

Answer 18

refers to any form of illegal activity carried out using electronic methods to deliberately and maliciously attack computer hardware or software, including computer networks, devices, and critical infrastructures. Most cybercrime is committed byhackers (or cybercriminals).
Cybercrime typically disrupts the activities of a business and can temporarily stop its operations. This results in the business suffering from a loss of sales revenue, and potential damage to its corporate image, while the issue is fixed or repaired.

Question 19

examples of cyber crime

Answer 19

• Computer malware
• Cyberextortion
• data breaches
• identity theft
• online scams
• phishing

Question 20

computer malware

Answer 20

A computer malware or virus is a malicious code or programme that once activated infects a computer system and changes how it works or stops the device from functioning.

Question 21

cyberextortion

Answer 21

Cybercriminals demanding money to prevent a threatened cyber-attack.

Question 22

data breaches

Answer 22

(also known asdata leak) is a security violation that involves sensitive, protected, and/or confidential data being viewed, copied, transmitted, or stolen by an unauthorized person.

Question 23

identity theft

Answer 23

This occurs when personal data and information is stolen and used illegally, such as banking and credit card fraud.

Question 24

online scams

Answer 24

This refers to fraudulent behaviour using Internet technologies, such as email fraud.

Question 25

phishing

Answer 25

This is the unethical and illegal act of using reputable business names, telephone numbers, emails, and websites to deceive people so that they reveal personal information, such as passwords and credit card numbers or repaired.
The cost of cybercrime for a business are expected to keep growing in the future (Statista 2023).

Question 26

cyber security

Answer 26

refers to the policies, processes, and procedures used to safeguard an organization’s computer systems and networks from unwanted attacks, such as information disclosure, data theft, or physical damage.
Nowadays businesses need to invest in cybersecurity, and they do not take it seriously can get into trouble with the authorities. For example, the Chinese government fined Didi (China’s largest taxi hirecompany) 8.026 billion yuan ($1.2 bn) for breaking its national cyber security laws

Question 27

critical infrastructures

Answer 27

are the crucial computer systems, structures, networks, and facilities required for the effective functioning of an organization in this modern and digital corporate world. Critical infrastructures could be physical, such as artificial neural networks (ANN) and data centres. Or non-physical, such as cloud computing.