Information Systems (2) Flashcards
Why is product profitability necessary?
As a firm should not only want to know profits or losses being made by each of its products
Why is customer profitability necessary?
Some customers or groups of customers are worth more than others
Why are pricing decisions necessary?
Accountin info can help analyse how profits and cash flows vary according to price and prospective demand
Why is the value of market share necessary?
Firm must be aware of what it is worth to increase market share of one of its products
Why is the shareholder wealth necessary?
Future profitability determines the value of a business
Why is cash flow necessary?
Loss-making company can survive if it has adequate cash resources, but a profitable company cannot survive unless it has sufficient liquidity
Features of management control information (1)?
Commonly expressed in money terms
Collected in a standard manner
Entire organisation
Often quantitative
Features of management control information (2)?
Primarily generated internally
Relevant to short and medium terms
Routinely collected and disseminated
Summarised at a relatively low level
Types of information in management controls?
Productivity measurement
Budgetary control or variance analysis reports
Cash flow forecasts
Staffing levels
Profit results within a particular department
Labour revenue statistics within a department
Short-term purchasing requirements
What does operational information include a lot of?
Transaciton data
What should happen with operational info before converted to management control info?
Must be consolidated into totals in management reports before it can be used to prepare management control information
How is operational info often expressed?
In terms of units, hours, qunatities of material
How is tactical info often expressed?
Expressed in money terms
What is transaction processing system (TPS)?
Collects, stores, modifies and retrieves the transactions of an organisation
Two main types of transaction processing?
Batch transaction processing
Real time transaction processing
What is meant by batch transaction processing?
Collects data as a group and processes it later
What is meant by real time transaction processing?
Involves immediate processing of data
Characteristics of transaction processing system?
Controlled processing
Inflexibility
Rapid response
Reliability
What is controlled processing?
Processing must support an organisation’s operations
What is inflexibility?
Wants every transaction to be processed in the same way regardless of user or time
What is rapid response?
Fast performance is critical. Input must become output in seconds
What is reliability?
Backup and recovery procedures must be quick and accurate
