1. HND in Computing and Software
Engineering
SEC4101: Business Information Systems
Level: 4
Credit Value: 10
Lesson 01 - Introduction
Lecturer: Mr. Deloosha Abeysooriya
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2. Unit Aim
This Unit is designed to introduce learner to different information
systems available and their applicability to the business
organizations in order to maximize the business benefits. The unit
furthermore analyze the information requirements of the
organizations and how different information that are suitable for
different information needs
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3. Unit Learning Outcomes
On successful completion of this unit a learner will:
Identify the information needs of organizations and its departments.
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4. Reference Materials
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• BEYNON-DAVIES, P. 2013. Business information systems. 2nd ed. Basingstoke:
Palgrave Macmillan
• BOCIJ, P., GREASLEY, A. and HICKIE, S., 2015. Business information systems
technology, development and management for the e-business. 5th ed. Harlow: Pearson
Education
• Chris-kimble.com. (2015). Different Types of Information System and the Pyramid
Model. [online] Available at: http://www.chris-
kimble.com/Courses/World_Med_MBA/Types-of-Information-System.html [Accessed 4
June. 2019]
• Executive Leadership Series) (Wiley, 2010) ISBN-10: 0470625740
• Gray, J. and Reuter, A. (1995). Transaction processing. San Francisco, Calif.: Morgan
Kaufmann
• LAUDON K. and LAUDON J., 2014. Management information systems managing the
digital firm. 13th ed. Boston: Pearson Higher Education. (Global edition)
7. Outline
• What is a Business
• Features of a Business
• Types of Businesses
• Business Objectives and Examples
• SMART Criteria
• Goals and Objectives difference
• Vision and Mission of an Organization
• Interdependence Between Organizations and Information Technology
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9. What is a Business?
An organization or economic system where
goods and services are exchanged for one
another or for money
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10. What is a Business?
“The regular production or purchase and sale of goods
undertaken with an objective of earning profit and acquiring
wealth through the satisfaction of human wants.”
“Business refers to a form of activity conducted with an
objective of earning profits for the benefit of those on whose
behalf the activity is conducted.”
“Human activity directed towards producing or acquiring
wealth through buying and selling of goods.”
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11. 1. Economic Activity
Business necessarily has to be an economic activity
Any activity that gives a monetary return is an economic
activity
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Features of business
12. 2. Exchange of goods and services
All business activities are directly or indirectly
concerned with the exchange of goods or services for
money or money's worth
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Cont.
15. 4. Risks and Uncertainties Cont.
Predictable factors are controllable to some extent:
a) Taxes
b) Change in the volume of expected sales
c) Cost of supplies and equipment
d) Overhead costs
e) Salaries
f) Cost of goods and services offered
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Cont.
16. 4. Risks and Uncertainties Cont.
Unpredictable factors include:
a) Changes in trends and tastes of customers
b) Impact of the local economy on customer base
c) Any unexpected action taken by your competitors
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Cont.
17. 5. Profit Motive
Profit is an indicator of success and failure of business
It is the difference between income and expenses of the
business
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Cont.
18. 6. Government control
Business organizations are subject to government
control
They have to follow certain rules and regulations
enacted by the government
Government ensures that the business is conducted for
social good by keeping effective supervision and control
by enacting and amending laws and rules from time to
time.
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Cont.
20. Which of the following is not a characteristic of a
business activity?
a) Exchange of goods and services
b) The factor of risk
c) Economic Activity
d) Wages
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Question
21. The correct answer is option D.
Wages is not a characteristic of a business activity.
The payment of receipt of wages is not a proof of a
business activity, so it is not one of the
characteristics of business.
21
Answer
31. 31
Advantages of sole proprietorships
Easy and inexpensive to create
Unless you need certification or local
permits, government intervention is
minimal
Owner makes all business decisions & has
control over all aspects of the business.
Flexibility in scheduling to meet owner’s
needs
32. 32
Advantages of sole proprietorships
Owner receives all profits
Privacy – owner is the only one who knows
details of the business
Secret ideas, formulas, or recipes
Ability to act quickly in making decisions – no
checking with others
33. 33
Advantages of sole proprietorships
Tax advantages
Business itself pays no taxes
Taxes are paid as personal income of
owner which is usually lower than
corporate taxes
Many business expenses are
deductible
34. 34
Advantages of sole proprietorships
Easy to close/dissolve
Pay employees and creditors
Sell your equipment
Notify customers if possible
35. 35
Disadvantages of sole proprietorships
Owner has unlimited liability for all debts and
actions of the business
Unlimited liability: The debts of the business may be
paid from the personal assets of the owner.
If you cannot pay business debt with business income,
bill collectors can take your personal assets (home,
car)
36. 36
Disadvantages of sole proprietorships
Difficult to raise capital
Banks/lenders consider sole proprietorships to be a
high-risk investment
Needs include paying employees, purchasing
equipment & inventory, & running the business
37. 37
Disadvantages of sole proprietorships
Sole proprietorship is limited by his/her
skills and abilities
Uncertain life
• Illness or injury that prevents you from
working may cause you to close
• Bankruptcy will dissolve your business
• The death of the owner automatically
dissolves the business
38. 38
unlimited liability
when the owner is
responsible for the
company’s debts
limited liability
holds a firm’s owners
responsible for no
more than the capital
that they have
invested in it
39. 39
02. Partnership
A form of business ownership in which two or
more people share the assets, liabilities, and
profits
40. 40
Cont.
Contract between partners spelling out the
rules of partnership
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners
42. 42
Advantages of Partnerships
Fairly easy & inexpensive to start
May pay attorney if you develop a partnership
agreement
Decreased Competition
Combining like businesses will decrease or eliminate
competition
43. 43
Advantages of Partnerships
Combined resources
Team with partners with different skills,
experience, contacts, & capital
Sharing responsibilities makes business run
more efficiently & smoothly
Increase the amount of capital to run the
business. Lenders may be more willing to lend
or extend credit
44. 44
Advantages of Partnerships
Reduced expenses
When two or more businesses combine
expenses are no longer being duplicated
Ex. office space, supplies, utilities
Business losses are shared by all
partners
45. 45
Advantages of Partnerships
The partnership does not pay income tax on
profits
Each partner pays income tax on her/his
individual share of the profit
46. 46
Disadvantages of Partnerships
Unlimited liability
Each owner in a general partnership has
unlimited liability
Each partner can lose personal assets to
pay business debt
47. 47
Disadvantages of Partnerships
Limited Capital
Although partners may bring more capital to the
business than sole proprietors, it is still limited to
what each can contribute
Some lenders may still be reluctant to lend large
amounts
48. 48
Disadvantages of Partnerships
Difficulty in ending
Withdrawing can be complicated if there is no written
partnership agreement
By law profits must be divided equally if no
agreement
49. 49
Disadvantages of Partnerships
Partnerships may lead to disagreements
May disagree on business goals, finances,
responsibilities, & division of profits
Can affect the efficiency of the business, morale of
employees, & success or failure of the venture
50. 50
Disadvantages of Partnerships
Uncertain life/Transferability
Unless specified in a detailed partnership agreement,
bankruptcy, death & the withdrawal or admittance of
a new partner dissolves the partnership
Remaining partners may start a new partnership if
they have the money to buy the former partner’s
share
51. 51
03. Corporation
A corporation is a legal form of business that is separate from its
owners. In other words, it’s a business that is a separate legal
entity from its shareholders
54. 54
Advantages of Corporations
Financial Power
Can raise money quickly by issuing shares of stock
Because it is closely regulated by the government
Financial institutions are more willing to lend
larger amounts of capital
55. 55
Advantages of Corporations
Limited Liability
Owners are liable only up to the amount of their
investments. Personal assets cannot be used to pay
business debt
56. 56
Advantages of Corporations
Easy-to-transfer ownership
Ownership simply transferred by selling stock to
someone else
New stock certificate is issued in the name of new
stockholder. No permission is required by others
57. 57
Disadvantages of Corporations
Difficulty in forming & operating
Legal assistance is needed to start a corporation
Lawyer fees can be very expensive
Must request approval from the government
58. 58
Disadvantages of Corporations
Corporations are subject to more government
regulations than partnerships or sole
proprietorships
Reporting & taxation requirements
Required to keep detailed reports for stockholders
& to keep them informed of certain corporate
transactions, meetings, & voting rights
59. 59
Disadvantages of Corporations
Dual taxation
Corporation is taxed on profits from the company
Shareholders are taxed on the dividends they earn
on their investments
60. 60
Disadvantages of Corporations
Separate owners & managers
Stockholders are not generally involved in the day-
to-day operation of the corporation
Stockholders form a board of directors to make
decisions about the business & managers carry out
these decisions
Separation of ownership & management provides
more opportunity for irregularities or
misunderstandings
61. 1. What is the difference between a sole
proprietorship and a partnership?
2. If a partner makes a bad decision, what
responsibility do the other partners have?
61
Question
62. 1. A sole proprietorship is owned by one person. A
partnership is owned by two or more people
2. All partners share responsibility for a bad decision
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Answers
63. 3. Explain how the corporate form gives owners more
protection from liability?
4. Discuss how to decide which legal form to use?
63
Question
64. 1. A sole proprietorship is owned by one person. A
partnership is owned by two or more people
2. All partners share responsibility for a bad decision
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Answer
67. Vision
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Vision statement questions look like:
What are our hopes and dreams?
What problem are we solving for the greater good?
Who and what are we inspiring to change?
68. Vision Example
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AMAZON: Our vision is to be earth’s most customer-centric
company; to build a place where people can come to find and
discover anything they might want to buy online
72. Mission Example
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AMAZON: We strive to offer our customers the lowest possible
prices, the best available selection, and the utmost convenience
76. What is an Objective?
Objectives are the goals, aims or purposes that
organizations wish to achieve over varying
periods of time
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77. Objectives of a Business
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79. Economic Objectives
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• Creation of customers
• Profit earning
• Regular innovations
• Best possible use of resources
80. Social Objectives
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• Production and supply of quality goods and services
• Adoption of fair trade practices
• Contribution to the general welfare of the society
81. Human Objectives
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• Economic well being of the employees
• Social and psychological satisfaction of employees
• Development of human resources
82. National Objectives
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• Creation of employment
• Promotion of social justice
• Contribute to the revenue of the country
• Self-sufficiency and Export Promotion
83. The most effective business objective meet the
following criteria
S.M.A.R.T
S - Specific
M - Measurable
A - Agreed
R - Realistic
T - Time Specific
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84. Cont.
S.M.A.R.T
S - Specific
Objectives are aimed at what the business does
e.g. a hotel might an objective of filling 60% of its beds a
night during October, an objective specific to that
business
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85. Cont.
S.M.A.R.T
M - Measurable
The business can put a value to the objectives
e.g. 10000 in sales in the next half year of trading
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86. Cont.
S.M.A.R.T
A - Agreed
Now we need our SMART company goal to be achievable
If we were to talk about a 200% increase depending on the
circumstances (but most likely) it would be unattainable, making the
goal unbelievable, discouraging anyone who had to reach it and
turning it into something useless and purposeless
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87. Cont.
S.M.A.R.T
R - Realistic
The objective should be challenging, but it should also be
able to be achieved by the resources available
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88. Cont.
S.M.A.R.T
T - Time Specific
They have a time limit of when the objectives should be
achieved
e.g. by the end of year
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91. The Role of Information Systems in Business Today
Management Information Systems
Information Systems in Global Business Today
The Interdependence Between Organizations and Information
Technology
There is a growing interdependence between a firm’s information systems and its business capabilities.
Changes in strategy, rules, and business processes increasingly require changes in hardware, software,
databases, and telecommunications. Often, what the organization would like to do depends on what its
systems will permit it to do.
