Managers face many challenges in managing information systems as organizations and systems continuously change. First-order effects are direct outcomes of a new system while second-order effects are indirect outcomes. Whether a system is successful depends on factors like the organization's competitive environment, culture, structure, processes, and existing IT infrastructure. Privacy is important for individuals in organizations because electronic monitoring can track sensitive personal data like internet usage, medical information, and physical movements. Organizations should consider balancing oversight with employees' reasonable expectations of privacy.

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MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER- II
SUBJECT CODE & NAME -MBA204 & MANAGEMENT INFORMATION SYSTEMS
SET- 1
Q.1 What are the different challenges a manager face in managing Information systems?
Answer:
Managing Information System in organizations is a highly challenging and complex task. One
reason for this complexity is that neither organizations nor the IS they use remain static over
time – both change continuously, and it is the job of management to ensure that the
systems remain useful and relevant for their organizational goals at all times. Organizations
change to respond to the needs of the business and economic environment in which they
thrive. They may have to change their services, their products, their internal structure, and
the manner in which they do their business to meet the challenges of the environment.
Organizations also change as their employees gain more experience and learn and adjust to
their work environment. The employees change the manner in which they work, including
the manner in which they work with IS, and with this they change the way processes within
organizations are carried out.
First-order and second-order effects
The outcome of the implementation of a new IS could be positive or not, and this will
depend on the situation at the organization. The outcomes that arise as a direct
consequence of the introduction of an IS are known as first-order effects. They are usually
visible in organisations in the form of increased speed of processing of data or increased
volume of processing and these are what any organization would have intended to gain
from the IS that it has implemented.
The first-order effects can be positive or negative depending on how the organization
adapts to the new system.
Effects of competition and organizational traits

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Whether an IS is successful and is able to meet its intended effects is largely dependent on
the organization it is being implemented in and on the competitive environment, culture,
structure, the processes the organization follows, and the IT infrastructure already in place
in the organization.
The competitive environment is the competition that the firm faces in the market in which it
operates. Often the decision for adopting an IS is based on what competitors are doing and
how one can keep up or get ahead of the competition. In the late 1990s many firms across
the world adopted e-commerce because that was the means by which they could remain
competitive in a rapidly changing environment.
Effects of organizational structure
The structure of an organization is the manner in which employees are constituted or
grouped within the organization. Many government departments, for instance, are
structured as a hierarchy where the highest level person has the greatest authority and
those reporting to that person are delegated responsibility and authority. For example, in a
government department the person at the top of the hierarchy would be a minister and
reporting to him/her would be secretaries. Below the secretaries would be joint secretaries
and so on, down to the lowest level consisting of offi ce workers. Along with authority, the
functions of different people in the hierarchy would also be different, and these functional
differences are used to create divisions, departments, and groups within the larger
department.
Support for organizational processes
Some organizations use information systems to change or challenge the existing hierarchy in
place. Workflow systems may alter the manner in which employees receive and process
documents, thus helping to introduce efficiencies in the process.
Q.2 Explain the concepts of
a) Transaction Processing System
b) Management Information System

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Answer:
a) Transaction Processing System
A transaction is any activity of the organization that generates information. For example, the
activities related to buying a ticket from the Indian Railways generates many transactions,
each of which produces information that is recorded by the systems. Some transactions
involve exchange of goods or services while others may be purely informational. A
transaction processing system records all the transactions as they happen. In this sense,
such systems are considered to be online systems.
When users initiate transactions, the systems respond in a pre-specified manner, such as
asking the user to fill in information about themselves. Most systems are designed to serve
many users simultaneously. They are also designed to respond quickly and in a manner that
makes the systems appear ‘live’ to the user.
Most transaction processing systems present carefully designed interfaces to the user that
guide the transactions. A transaction processing system helps the user during a transaction
by changing screens and the information on the screen.
This requires the systems to provide information that is relevant for the situation. The
exchange of information is highly sensitive to the context that is desired by the user.
Modern transaction systems allow users to change the information input by them and
backtrack to earlier parts of the transaction stream.
b) Management Information System
Management information systems (MIS) process the information generated by the
transaction processing systems of an organization and create reports for use by the
management. A typical MIS report may consist of the following information that depicts
various activities of the organization:
1. A report on the average daily sales of the organization with details for each product and
each region.
2. The daily production of goods.
3. The seasonal sales of the organization with regard to each region and product.

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4. The cash balances for each division, with details of inflows and outflows for the week.
5. A report on personnel and project assignments and the number of hours logged in by
each person for the month and for the week.
6. A report on printing and paper charges across the organization for the year, with details
related to divisions and seasons.
Q.3 How Information system can be used to support Competitive strategy? Substantiate
with suitable examples.
Answer:
The promise of information systems is that they enable the competitive strategy of
commercial firms. The competitive strategy of a commercial firm is its long-term
competitive position, such as of being a low-cost player or a differentiator, which the firm
adopts. A firm’s strategy is the set of activities it engages in as part of its long-term
competitive goals. Strategies lead to operational goals and to tactics that the firm
undertakes.
Long-term goals are of value to non-commercial organizations too. For example,
government departments may adopt a goal of reaching out to all citizens to provide
services, for which they can evolve a strategy based on information systems. Government
departments do not face competition as such, and their main concerns are of service
delivery and efficiency.
Competitive
Strategy
Use of Information
Systems
Example
Create barriers
to entry for
competition
To create barriers to entry
of
new competition, fi rms
may
lock-in existing customers
Yatra.com is an online
travel portal that enables
customers to buy airline
and railway tickets from
its site. It maintains a

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with
loyalty programmes and
free access
accounts created with
Information systems. Data
from such loyalty
programmes
can also be used to
identify
customer tastes and
patterns
of buying to further
provide
them with goods and
services.
loyalty programme by
providing discount coupons
to customers who
Purchase frequently.
Reduce bargaining
power of
suppliers
The bargaining power of
suppliers
is reduced by creating
customized logistics
channels
with suppliers that enables
an exclusive access, thus
increasing costs for
suppliers
if they want to seek other
Customers.
Deutsche Post DHL has
information systems to link
all its partners in its logistics
Chain. This not only
creates barriers to entry
to competition, but also
prevents its suppliers from
Seeking other partners.
Reduce bargaining
power of
buyers
The bargaining power of
buyers
is reduced by providing
low-cost,
bundled services from
By creating an online
facility for buying tickets,
the Indian Railways has
reduced the need for its
Customers to seek

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a single source that is
highly
Customized to their needs.
They
would not be prone to
seek
alternative sources if a
sufficient
lock-in is created.
alternatives.
Provide low cost
Products
Transactions costs are
reduced by having
information
systems that increase the
Volume and speed of
transactions.
When scaled up, this
gives a significant
competitive
Advantage.
The ICICI Bank initiated
a network of automated
teller machines (ATMs)
across India to reduce
Costs of banking for clients.
Clients could access
their accounts any time
and easily.
Provide niche
Products.
A differentiation strategy is
possible by reaching out to
new markets and
customers
Using the Internet.
Information
systems help customize
offerings
and also provide high
efficiency levels for
implementing
The strategy.
The United Parcel Service
(UPS) created a special
information systems that
kept track of parcels as
They were shipped. This
was a unique offering,
differentiating it from its
Rivals.

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SET -2
Q.1 Explain the following concepts
a) Electronic Data Interchange (EDI)
b) Online Payment Technology
c) Mobile Commerce
Answer:
a) Electronic Data Interchange (EDI)
Before the growth of the common standards for the Internet and the growth of Extranets,
firms exchanged data electronically through private networks. This process was called
electronic data interchange (EDI). The EDI standards were initiated in the 1960s in the USA
and Europe to allow transportation firms to exchange data across national boundaries.
Later, many trade bodies evolved further standards for exchange of commerce-related data.
EDI standards are not similar to the data standards used by the Internet; they are based on
different, often proprietary, standards that are used only by the partner organizations.
b) Online Payment Technology
One of the biggest challenges posed to e-commerce has been the issue of payments. In a
typical commercial transaction conducted manually, a customer is able to pay cash for a
purchased item or pay by credit card. If it is by credit card, this transaction is verified by a
service to ensure that the card is valid, and then the transaction is posted. The seller can
also verify the authenticity of the buyer by seeing an identity card.
Online payment technologies address the issue of managing transactions in a secure and
efficient manner. Establishing the identity of the buyer is one of the first problems that the
payment technologies face. Once the identity is established, the next challenge is to have an
easy process by which the payment can be made without the intervention of too many
intermediaries and also at a reasonable cost. Once a payment has been secured, the

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remaining problem is that of chargeback’s, that is cancellation, for some reason, of the
transaction and a subsequent reversal of the payment.
c) Mobile Commerce
With the pervasive availability of mobile phones, some firms have created innovative
payment solutions through mobiles. The idea is to create the twin assurances of security
and ease of payments with the mobile phone. One such service, known as Playmate, works
in a way discussed below.
The customer creates an account with Playmate that links to customer’s bank or the credit
card owned by the customer. The customer also provides her mobile phone number to
Paymate, which then gives the customer a unique personal identification number (PIN) that
he/she can use to verify the transaction. When the customer accesses an e-commerce
website and is ready to make a payment, he/she selects the Playmate option and provides
her phone number. At this point Palmate initiates an automated phone call to the customer,
asking the customer to enter his/her PIN. This acts as a verification. After this, Paymate
charges the customer’s bank with the relevant amount and sends a message to the
customer’s mobile about the same.
The main advantage of payment through mobile service is that it can be used without a
computer or access to the Internet and without a credit card. For this service to work, the
merchant has to have an account with the service, similar to the arrangements merchants
have with credit card companies.
Q.2 What is DSS? How it is different from MIS? How DSS helps in Decision making?
Answer:
Decision support systems (DSS) are used extensively across organizations to assist
managers with making decisions. DSS are different from management information systems
as they are used on an as-needed basis and created for solving special types of decision

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problems. Decision making by managers involves the phases of intelligence, design, and
choice, and DSS help mainly with the choice part. DSS support structured and unstructured
types of decisions.
Modern approaches to decision support include analytics and artificial intelligence
techniques for predictive and real-time analysis of data. Use of tools such as neural
networks, decision trees, clustering, and visualisation are quite extensive.
MIS and DSS:
MIS essentially present data to managers in various forms and from various sources. The
intent of MIS is to enable managers to see the data pertaining to the functioning of the
organization in a summary manner that enables both a bird’s eye view as well as a
penetrating view of the data. MIS too process the data but in a manner as to show different
views and summaries. DSS, on the other hand, are designed to help managers with
decisions, and the analysis is meant only for a particular decision.
Differences between MIS and DSS
Management Information SystemsDecision Support Systems
Provide managers with data and
reports on a regular basis
Support managers for decision making
on an ad hoc basis
Reports are targeted for specific users,
especially management
Find use across the organization, by
whoever needs help with problems.
At the choice stage, the criteria and parameters for the decision help curtail the amount of
search required to arrive at a decision. If the criteria are not specified sharply then the
number of alternatives to be considered to arrive at a decision may be very large. This stage
may also require returning to the intelligence gathering activity, and then to the design
stage to change or modify the criteria and the weights used to apply them. In his seminal
work, Herbert Simon also showed that decision makers have bounded rationality, implying
that they are restricted in the number of choices and criteria they can actually bring to bear

10. MBA 204 MANAGEMENT INFORMATION SYSTEMS Page 10
in a decision-making situation. These limitations exist, in part, because of the limits on the
cognitive abilities of humans or, in other words, the limits on the number of things that
people can think about at a time. Most people are content with a satisfactory answer, not
necessarily one that is the best or optimal.
DSS are designed to support mainly the choice stage of the decision-making process.
Managers can enter the relevant data into the system, select or priorities their criteria and
let the system decide on the final solution. Mathematical models are usually built into the
system to help analyse the data and arrive at solutions. Some modern software also assist
decision makers in the intelligence stage, where they seek out pertinent information from
organizational databases or from the Internet.
Q.3 Explain why privacy is important for individuals in the organizations? How workplace
electronic monitoring is done in the organizations?
Answer:
Information systems are used widely across organizations, and they enable data and
information to be widely distributed for use. When the data pertains to individuals (relating
to their work, personal habits, or personal life), and it resides on organizational information
systems, the question of privacy that arises here is: Whose data is this – of the individual or
of the organization?
Owing to the complex nature of information systems and the manner in which data is
created, stored, and manipulated, the answer to this question is usually difficult. To answer
the question of privacy one has to consider why it is important in the first place. Data and
information relating to individuals could be of sensitive nature. Some examples of such kind
of data are as follows:
1. Employees, who work extensively with computers, log in every morning when they come
to work and log out in the evening when they leave. During the working day, every time
they leave their desk or are not working on the computer, the system logs their inactivity at
work. For example, a United Airlines worker, in the USA, was threatened with job loss on the

11. MBA 204 MANAGEMENT INFORMATION SYSTEMS Page 11
grounds that she had spent more than the allotted time in the bathroom, making her co-
workers take up her work.
2. Medical records detailing illnesses and treatments, hospital visits, and medication
routines are all stored on organizational databases that contain personnel data. The data is
specific to individuals and, for some organizations, also contains details about the
individual’s family members. In the USA, for example, the medical records of the famous
singer Britney Spears were read by employees of a hospital in which she was treated. The
employees later leaked the information to the press. Spears took legal action against the
hospital, which had to fi re several employees.
3. Web surfing activities of individuals are also logged by corporate web servers. Which sites
individuals have visited, how long they have been on the site, and what kind of material
they have downloaded are also logged. A multinational media firm, for example, threatened
to fi re an employee based on his visits to Yahoo.com from an office computer. The Firm had
obtained details about the employee’s surfing behavior from server logs.
4. Security systems in some organizations, which are based on swipe cards or security cards
that enable doors and offi ce buildings to be opened or accessed, retain records of all
individual movements across buildings and workplaces. Data pertaining to individual
movements is available in security logs. In the Vatican, for example, swipes were re-
introduced in 2008 to monitor the movement of employees. This was in response to
criticism that employees were ‘slacking off’. Even though the Pope was not entirely in favor
of such monitoring, it was introduced to improve efficiency of staff.
5. Many organizations also check all incoming and outgoing e-mails of their personnel. The
e-mails are checked for content and attachments. Some organizations either remove e-mails
containing certain keywords, such as expletives, or flag them to warn employees.
There are many possible ways in which electronic monitoring can be effected in
organizations. Some of these are as follows:
1. Use of digital video cameras for internal monitoring of employees, offices, hallways, and
buildings. The video footage is stored for later retrieval and viewing.
2. Use of computer network logs to record all use of fi les, visits to websites, and access to

12. MBA 204 MANAGEMENT INFORMATION SYSTEMS Page 12
other computer networks and programs.
3. Scanning and storage of all outgoing and incoming e-mails from and to employees.
4. Use of employee identity cards to monitor physical movement of employees.
5. Access given to outside agencies to obtain personal data on employees, such as credit
card statements, bank records, medical records, and pharmacy purchases.
6. Access to all fi les on employees’ personal computers and laptops, including removable
storage devices.
Often, other types of workplace monitoring are also conducted by firms, such as testing for
drugs and alcohol. However, these are not dependent on digital technologies and are not
considered here.