Managerial Decision-Making Challenges (3)
(1) Managers need to analyze large amounts of information, (2) managers must make decisions quickly, (3) managers must apply sophisticated analysis techniques, such as Porter's strategies or forecasting, to make strategic decisions.
Organization Structure
(1) Operational - employees develop, control, and maintain core business activities required to run the day-to-day operations, (2) managerial - employees continuously evaluate company operations to hone the firm's abilities to identify, adapt to, and leve
Structured Decisions
Decisions that arise in situations where established processes offer potential solutions; operational level
Semi-structured Decisions
Decisions that occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision; managerial level
Unstructured Decision
Decisions that occur in situations in which no procedures or rules exist to guide decision makers toward the correct choice; strategic level
Decision-Making Process Steps
(1) Problem identification. (2) data collection, (3) solution generation, (4) solution test, (5) solution selection, (6) solution implementation
Project
A temporary activity a company undertakes to create a unique product, service, or result
Metrics
Measurements that evaluate results to determine whether a project is meeting its goals
Critical Success Factors (CSFs)
The crucial steps companies perform to achieve their goals and objectives and implement their strategies
Key Performance Indicators (KPIs)
The quantifiable metrics a company uses to evaluate progress toward critical success factors; more specific than CSFs
Market Share
The proportion of the market that a firm captures; the firm's sales divided by the total market sales for the entire industry
Return on Investment (ROI)
The earning power of a project; the profitability of a project divided by the costs
Efficiency MIS metrics
Measure of the performance of MIS itself, such as throughput, transaction speed, and system availability
Effectiveness MIS metrics
Measure of the impact MIS has on business processes and activities, including customer satisfaction and customer conversion rates
Benchmarks
Baseline values the system seeks to attain
Benchmarking
A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance
Model
A simplified representation or abstraction of reality
Transactional Information
All the information contained within a single business process or unit of work, its primary purpose being to support the performance of daily operational or structured decisions
Online Transaction Processing (OLTP)
The capture of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, and (3) update existing information to reflect the new information
Transaction Processing System (TPS)
The basic business system that serves the operational level (analysts) and assists in making structured decisions
Source Documents
The original transaction record
Analytical Information
All organizational information, its primary purpose being to support the performance of managerial analysis or semi-structured decisions
Online Analytical Processing (OLAP)
The manipulation of information to create business intelligence in support of strategic decision making
Decision Support Systems (DSSs)
Model information using online analytical processing (OLAP), which provides assistance in evaluating and choosing among different courses of action
What-If Analysis
Checks the impact of a change in a variable or assumption on the model
Sensitivity Analysis
A special case of what-if analysis, the study of the impact on other variables when one variable is changed repeatedly
Goal-Seeking Analysis
Finds the inputs necessary to achieve a goal such as a desired level of output
Optimization Analysis
An extension of goal-seeking analysis, finds the optimum value for a target variable by repeatedly changing other variables, subject to specified constraints
Executive Information System (EIS)
A specialized DSS that supports senior-level executives and unstructured, long-term, nonroutine decisions requiring judgment, evaluation, and insight
Granularity
The level of detail in the model or the decision-making process
Visualization
Graphical displays of patterns and complex relationships in large amounts of data
Digital Dashboard
Tracks KPIs and CSFs by compiling information from multiple sources and tailoring it to meet user needs
Consolidation
The aggregation of data from simple roll-ups to complex groupings of interrelated information
Drill-Down
Enables users to view details, and details of details, of information; the reverse of consolidation
Slice-and-Dice
The ability to look at information from different perspectives
Artificial Intelligence (AI)
Simulates human thinking and behavior, such as the ability to reason and learn
Intelligent Systems
Various commercial applications of artificial intelligence
Expert Systems
Computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
Neural Network
A category of AI that attempts to emulate the way the human brain works
Fuzzy Logic
A mathematical method of handling imprecise or subjective information
Genetic Algorithm
An artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
Intelligent Agents
A special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users
Shopping Bot
Software that will search several retailer websites and provide a comparison of each retailer's offerings including price and availability
Virtual Reality
A computer-simulated environment that can be a simulation of the real world or an imaginary world
Customer-Facing Processes
Business processes that result in a product or service received by an organization's external customer; front-office processes
Business-Facing Processes
Business processes that are invisible to the external customer but essential to the effective management of the business; back-office processes
Business Process Modeling (Mapping)
The activity of creating a detailed flowchart or process map of a work process that shows its inputs, tasks, and activities in a structured sequence.
Business Process Model
A graphic description of a process, showing the sequence of process tasks, which is developed for a specific purpose and from a selected viewpoint
As-Is Process Models
Business process model that represents the current state of the operation that has been mapped, without any specific improvements or changes to existing processes
To-Be Process Models
Business process model that shows the results of applying change improvement opportunities to the current (As-Is) process model
Swim Lane
Model layout that arranges the steps of a business process into a set of rows depicting the various elements
Workflow
The tasks, activities, and responsibilities required to execute each step in a business process
Business Process Improvement
The attempt to understand and measure the current process and make performance improvements accordingly
Automation
The process of computerizing manual tasks, making them more efficient and effective and dramatically lowering operational costs
Streamlining
Improving business process efficiencies by simplifying or eliminating unnecessary steps
Bottlenecks
When resources reach full capacity and cannot handle any additional demands
Redundancy
When a task or activity is unnecessarily repeated
Cycle Time
The time required to process an order
Business Process Reengineering (BPR)
The analysis and redesign of workflow within and between enterprises
Business Process Reengineering Model
Set project scope > study competition > create new processes > implement solution
Business Process Management (BPM) Systems
Systems that focus on evaluating and improving processes that include both person-to-person workflow and system-to-system communications