5.9 Management Information systems (HL) Flashcards
an information system (IS)
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.
example case of an information system (IS)
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.
data mining
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.
origins of the term data mining
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.
process of data mining
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.
data analytics
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!
three ways in which data analytics can be used
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.
how can data mining and data analytics be used
a retail chain uses data mining and analytics to optimize operations and enhance customer experience
customer segmentation in relation to a retail chain
Using data mining techniques, the retail chain can segment its customer base based on various attributes such as purchasing behaviour, demographics, and geographic location.
price optimisation in relation to a retail chain
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
personalised recommendations in relation to a retail chain
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.
managing/monitoring employees in relation to
what is ecommerce
thetrade of goods and services using the internet.
benefits of E-commerce for a business
- 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.
costs of E-commerce for a business
- 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.
benefits of e-commerce for customers
- 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.
costs of e-commerce for customers
- 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.
cyber crime
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.
examples of cyber crime
- Computer malware
- Cyberextortion
- data breaches
- identity theft
- online scams
- phishing
computer malware
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.
cyberextortion
Cybercriminals demanding money to prevent a threatened cyber-attack.
data breaches
(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.
identity theft
This occurs when personal data and information is stolen and used illegally, such as banking and credit card fraud.
online scams
This refers to fraudulent behaviour using Internet technologies, such as email fraud.
phishing
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).
cyber security
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
critical infrastructures
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.
