Module 1: Information Systems in Business

Learning Objectives
After studying this module, you should be able to:
1. Discuss common applications of computers and information systems.
2. Explain the differences between computer literacy and information literacy.
3. Define transaction-processing systems (TPSs).
4. Define management information systems (MISs).
5. Describe the four major components of an information system.
6. Define strategic information systems (SISs).
7. Discuss the differences between data and information.
8. Explain the importance and applications of information systems in functional areas of a
business.
9. Analyse how information technologies are used to gain a competitive advantage.
10. Apply the Five Forces Model and strategies for gaining a competitive advantage.
11. Review the IT job market.
12. Summarize the future outlook of information systems.

1-1 Computers and Information Systems in Daily Life

• Organizations use computers and information systems to reduce costs and gain a competitive
advantage.
• Common applications include:
• Grading exams and generating student reports.
• Point-of-sale (POS) systems in retail stores.
• Generating bank statements and managing ATMs.
• Smartphones for communication, productivity, and business operations.
• The Internet for shopping, learning, and social networking.

1-2 Computer Literacy and Information Literacy

• Computer Literacy: Skill in using productivity software (e.g., word processors, spreadsheets,
databases, presentation tools) and having basic knowledge of hardware, software, the
Internet, and collaboration tools.
• Information Literacy: Understanding the role of information in generating and using business
intelligence (BI). BI provides historical, current, and predictive views of business operations
and environments, giving organizations a competitive edge.
Key points for knowledge workers:
• Know internal and external sources of data.
• Understand why and what type of data should be collected.
• Convert data into information and eventually into business intelligence.
• Use data and information to gain a competitive advantage.

1-3 The Beginning: Transaction-Processing Systems (TPSs)

• TPSs focus on structured tasks like record keeping, inventory control, and payroll processing.
• Major reason for using TPSs: Cost reduction.
• Examples:
• Payroll automation reduces managerial judgment and personnel costs.
• ATMs automate banking transactions with features like cardless withdrawals, cash
dispensing, and receipts via phone or printout.
• Security risks with ATMs:
• ATM skimming involves recording PIN numbers and financial information using devices
installed inside or on top of ATMs.
• Protect your financial information by checking bank statements regularly, watching for
tampered machines, and covering your PIN when entering it.
1-4 Management Information Systems (MISs)
• Definition: An organized integration of hardware, software, data, processes, and human
elements designed to produce timely, integrated, relevant, accurate, and useful information
for decision-making purposes.
• Components:
• Hardware: Input, output, memory devices.
• Software: Commercial programs or in-house developed applications.
• Data: Collected and analysed for decision-making.
• Processes: Methods for performing tasks.
• Human Elements: Users, programmers, analysts, and technical personnel.
• Applications:
• Inventory control: Tracks stock levels, orders, and backorders.
• Sales forecasting: Uses historical data and models to predict future sales volumes.
• Public sector examples: Crime statistics, forecasts, and resource allocation in police
departments.

1-5 Major Components of an Information System

1. Data: Raw facts that serve as input to the system. Can come from internal (sales records,
personnel records) or external (customers, competitors) sources.
2. Database: A collection of all relevant data organized in integrated files. Managed using
database management systems (DBMSs) like Oracle or Microsoft SQL Server.
3. Process: Generates useful information for decision-making through transaction-processing
reports and models for analysis.
4. Information: Facts analysed by the process component, making them more useful for
decision-making.
Example:
• A university uses a database to store student data (first name, last name, age, major, etc.). The
process component analyses this data to generate insights like the fastest-growing major or
average student age.

1-6 Strategic Information Systems (SISs)

• Focus on long-term goals and assist organizations in achieving them.
• Support competitive strategies and can be applied across functional areas (production,
marketing, finance, etc.).
• Key characteristics:
• Goal-oriented.
• Involve top management.
• Multidisciplinary input.
• Oriented toward the future.
• Dynamic, constantly analysing the business environment.
• Applications:
• Reduce threats of substitute products/services.
• Enhance product differentiation.
• Improve customer and supplier relationships.
• Deploy IT tools throughout the supply chain for cost leadership.

1-7 Using Information Systems and Technologies

• Information systems collect, process, and deliver timely, relevant, and useful information for
decision-making.
• Tools used:
• Internet, computer networks, POS systems, RFID tags, etc.
• Importance:
• Information is the second most important resource after the human element.
• Timely, relevant, and accurate information enhances competitiveness and manages
resources effectively.
• Functional information systems:
• Personnel/Human Resource Information System (PIS/HRIS): Helps with hiring,
scheduling, predicting needs, and reporting demographics.
• Logistics Information System (LIS): Reduces transportation costs while maintaining
safe and reliable delivery.
• Manufacturing Information System (MFIS): Manages manufacturing resources to
reduce costs, improve quality, and optimize inventory decisions.
• Financial Information System (FIS): Provides timely information for financial executives.
• Marketing Information System (MKIS): Improves marketing decisions through analytics,
e-mail marketing, search engine marketing, and mobile technologies.

1-8 The IT Job Market

• High demand for IT jobs, especially in cloud computing, cybersecurity, and AI-related fields.
• Categories of IT jobs:
• Operations and help desk.
• Programming.
• Systems design.
• Web design and hosting.
• Network design and maintenance.
• Database design and maintenance.
• Robotics and artificial intelligence.
• Popular roles:
• Chief Technology Officer (CTO)/Chief Information Officer (CIO): Oversees long-range
planning and new developments.
• Manager of Information Systems Services: Manages hardware, software, and
personnel.
• Systems Analyst: Designs and implements information systems.
• Network Administrator: Oversees internal/external network systems and ensures
security.
• Database Administrator (DBA): Manages database design and implementation.
• Data Scientist: Automates data collection, applies models, and generates actionable
insights.

1-9 Outlook for the Future

• Predictions:
• Declining hardware and software costs will make information systems affordable for all
organizations.
• Advances in artificial intelligence (AI) and robotics will impact information systems and
the workforce.
• Improved networking technology will enhance connectivity and data transmission.
• Increased computer literacy among users.
• Continued growth of the Internet and e-collaboration.
• Growing sophistication of hackers and challenges in protecting personal information.
• Major trends:
• Ubiquitous computing: Devices everywhere, accessed via voice, touch, and gestures.
• Internet of Things (IoT): Connected devices improving productivity and reducing costs.
• Pervasive analytics: Integrating analytics into everyday business activities.
• Context-aware computing: Devices serving as intelligent assistants.
• Smart machines: Autonomous cars, drones, and robots.
Key Terms
• Business Intelligence (BI): Historical, current, and predictive views of business operations.
• Computer Literacy: Skill in using productivity software.
• Data: Raw facts.
• Database: Organized collection of data.
• Five Forces Model: Analyses buyer power, supplier power, substitutes, new entrants, and
rivalry.
• Information: Analysed facts for decision-making.
• Information Literacy: Understanding the role of information in generating business
intelligence.
• Management Information System (MIS): Produces useful information for decision-making.
• Process: Component that generates useful information.
• Strategic Information Systems (SISs): Focus on long-term goals.
• Transaction-Processing Systems (TPSs): Focus on data collection and processing.

Reviews and Discussions

1. Four major components of an information system: Data, database, process, and information.
2. Characteristics of a strategic information system: Goal-oriented, involves top management,
multidisciplinary, future-focused, and dynamic.
3. Differences between computer literacy and information literacy: Computer literacy focuses on
software skills, while information literacy focuses on understanding data and its use in
decision-making.
4. Applications of transaction-processing systems: Payroll processing, ATMs.
5. Example of MIS in private/public sectors: Inventory control in retail vs. crime statistics in law
enforcement.
6. Differences between data and information: Data are raw facts, while information is analysed
data for decision-making.
7. Applications of information systems in daily life: Grading exams, POS systems, online
shopping.
8. Decisions supported by HRIS, FIS, LIS: Hiring, budget allocation, logistics optimization.

Projects
1. Identify three applications of information systems at your institution and describe their impact.
2. Describe three information technologies used by grocery chains and their advantages.
3. Research a company using RFID tags and compare RFID with UPC systems.
4. Apply Porter’s strategies and the Five Forces Model to new and established businesses.
5. Discuss the growing sophistication of hackers and ways to protect personal information.
6. List advantages/disadvantages of online banking and popular apps.

Case Studies
1. FedEx Case Study:
• Technology improves customer service and reduces costs.
• Estimated annual savings: $57.56 million from reduced calls and $21.6 million from
package tracking.
• Technologies used: FedEx.com, Ship Manager, Clarify CRM software.
2. Mobile Technology in Retail:
• Scan-as-you-go devices and digital wallets transform shopping experiences.
• Strategies: Cost leadership, differentiation.
• Future role of smartphones: Central to payment systems, inventory tracking, and
personalized offers.
Central Node: Information Systems in Business

Branch 1: Common Applications of Computers and Information Systems

Sub-Branch 1.1: Daily Life Applications
- Point-of-Sale (POS) Systems
- Online Classes and Grading Systems
- Mobile Devices and Apps
- Social Networking Sites
- Video-Sharing Sites (e.g., YouTube)

Branch 2: Computer Literacy vs. Information Literacy

Sub-Branch 2.1: Computer Literacy
- Productivity Software (Word Processors, Spreadsheets)
- Basic Knowledge of Hardware and Software
- Internet and Collaboration Tools
Sub-Branch 2.2: Information Literacy
- Role of Information in Generating Business Intelligence
- Understanding Data Collection and Usage

Branch 3: Transaction-Processing Systems (TPSs)

Sub-Branch 3.1: Characteristics
- Focus on Data Collection and Processing
- Cost Reduction
Sub-Branch 3.2: Examples
- Payroll Processing
- ATMs in Banks

Branch 4: Management Information Systems (MISs)

Sub-Branch 4.1: Components
- Hardware and Software Technologies
- Data and Databases
- Processes
- Human Elements
Sub-Branch 4.2: Purpose
- Timely, Integrated, Relevant, Accurate Information for Decision-Making

Branch 5: Strategic Information Systems (SISs)

Sub-Branch 5.1: Focus
- Big-Picture, Long-Term Goals
- Competitive Strategies
Sub-Branch 5.2: Applications
- Entering New Markets
- Offering New Products
- Improving Existing Products

Branch 6: Data vs. Information

Sub-Branch 6.1: Data
- Raw Facts
Sub-Branch 6.2: Information
- Analysed Facts for Decision Making
Branch 7: Importance and Applications in Functional Areas
Sub-Branch 7.1: Logistics Information Systems (LIS)
- Reducing Transportation Costs
- Safe and Reliable Delivery
Sub-Branch 7.2: Manufacturing Information Systems (MFIS)
- Reducing Manufacturing Costs
- Increasing Product Quality
Sub-Branch 7.3: Personnel/Human Resource Information Systems (PIS/HRIS)
- Effective Personnel Decision-Making

Branch 8: Gaining Competitive Advantage with IT

Sub-Branch 8.1: Porter’s Five Forces Model
- Buyer Power
- Supplier Power
- Threat of Substitute Products
- Threat of New Entrants
- Rivalry Among Competitors
Sub-Branch 8.2: Strategies
- Overall Cost Leadership
- Differentiation
- Focus

Branch 9: IT Job Market

Sub-Branch 9.1: Categories
- Operations and Help Desk
- Programming
- Systems Design
- Web Design and Hosting
- Network Design and Maintenance
- Database Design and Maintenance
- Robotics and Artificial Intelligence

Branch 10: Future Outlook of Information Systems

Sub-Branch 10.1: Predictions
- Declining Hardware and Software Costs
- Advancements in Artificial Intelligence
- Improved Computer Literacy
- Enhanced Security and Privacy Measures
Sub-Branch 10.2: Major Computing Trends
- Ubiquitous Computing
- Internet of Things (IoT)
- Cloud Computing
Module 1 – INF1505

To reduce costs and gain a competitive

What is the primary purpose of information advantage by collecting, processing, and
systems in organizations? delivering timely, relevant, and useful
information for decision-making.

Skill in using productivity software (e.g., word

processors, spreadsheets) and having basic
Define "computer literacy."
knowledge of hardware, software, the Internet,
and collaboration tools.

Understanding the role of information in

generating and using business intelligence (BI),
Define "information literacy."
which provides historical, current, and
predictive views of business operations.

Systems that focus on data collection and

processing for structured tasks like payroll
What is transaction-processing systems (TPSs)? processing, inventory control, and banking
transactions. The main reason for using them is
cost reduction.

An organized integration of hardware, software,

data, processes, and human elements designed
What is a management information system
to produce timely, integrated, relevant,
(MIS)?
accurate, and useful information for decision-
making.

Name the four major components of an

Data, database, process, and information.
information system.

Data consists of raw facts, while information

What is the difference between data and
consists of analysed data that is useful for
information?
effective decision-making.
Systems that focus on long-term goals and
assist organizations or decision-makers in
Define strategic information systems (SISs). achieving them. SISs support competitive
strategies and can be applied across functional
areas.

What is Michael Porter's three strategies for Overall cost leadership, differentiation, and
gaining a competitive advantage? focus.

A framework analysing buyer power, supplier

power, threat of substitute products/services,
Explain the Five Forces Model. threat of new entrants, and rivalry among
existing competitors to enhance
competitiveness.

To help with hiring, scheduling, predicting future

What is the role of personnel/human resource
personnel needs, and reporting employee
information systems (PIS/HRIS)?
demographics.

To reduce transportation costs while

What is the role of logistics information systems
maintaining safe and reliable delivery by
(LIS)?
improving routing, scheduling, and budgeting.

To manage manufacturing resources, reduce

What is the role of manufacturing information
costs, improve product quality, and make better
systems (MFIS)?
inventory decisions.

To provide timely information to financial

What is the role of financial information systems executives for budget allocation, minimizing
(FIS)? risks, monitoring trends, and managing cash
flows.
To improve marketing decisions by providing
What is the role of marketing information
insights into market share, sales forecasts, price
systems (MKIS)?
analysis, and customer behaviour.

Operations and help desk, programming,

systems design, web design/hosting,
What is some popular IT-related jobs?
network/database administration, robotics,
artificial intelligence, data science, and more.

Declining hardware/software costs,

What is the future outlook for information advancements in AI, improved networking
systems? technology, increased computer literacy,
growing sophistication of hackers, and emerging

Radio-frequency identification tags used to

What is RFID technology? track inventory, assets, and products, offering
advantages over traditional barcodes.

By analysing their position in the market,

deploying IT tools to reduce costs, differentiate
How do businesses use Porter’s strategies and
products, target specific markets, and combat
the Five Forces Model?
threats from substitutes, suppliers, and new
entrants.

Point-of-sale (POS) systems for faster checkout

What are two examples of information
and RFID tags for inventory management and
technologies used in retail?
theft prevention.
Test: Module 1 - Information Systems in Business

Section 1: Multiple-Choice Questions (20 Questions)

Question 1
What is the primary purpose of information systems in organizations?
A) To entertain employees
B) To reduce costs and gain a competitive advantage
C) To store data indefinitely
D) To replace human decision-making

Question 2
Which term refers to skill in using productivity software like word processors, spreadsheets, and
presentation tools?
A) Computer literacy
B) Information literacy
C) Data analysis
D) Business intelligence

Question 3
What type of system focuses on structured tasks like payroll processing and inventory control?
A) Management Information System (MIS)
B) Transaction-Processing System (TPS)
C) Strategic Information System (SIS)
D) Database Management System (DBMS)

Question 4
Which component of an information system involves generating useful information for decision-
making?
A) Data
B) Database
C) Process
D) Hardware

Question 5
What does "business intelligence" provide?
A) Raw facts for decision-making
B) Historical, current, and predictive views of business operations
C) A list of employee records
D) Automated financial reports

Question 6
Which strategy focuses on offering products or services at the lowest possible cost?
A) Overall cost leadership
B) Differentiation
C) Focus
D) Market segmentation

Question 7
Which technology allows customers to pay using their smartphones?
A) RFID tags
B) Digital wallets
C) Bluetooth
D) QR codes
Question 8
Which of the following is NOT one of Michael Porter's Five Forces?
A) Buyer power
B) Supplier power
C) Threat of substitute products
D) Employee satisfaction

Question 9
What is the role of a database administrator (DBA)?
A) Designing user interfaces
B) Writing code for applications
C) Managing database design and implementation
D) Overseeing network security

Question 10
Which type of information system is used to improve marketing decisions?
A) Personnel Information System (PIS)
B) Logistics Information System (LIS)
C) Marketing Information System (MKIS)
D) Financial Information System (FIS)

Question 11
What is the main reason for using transaction-processing systems (TPSs)?
A) Cost reduction
B) Data visualization
C) Predictive analytics
D) Employee training

Question 12
Which of the following is NOT a characteristic of strategic information systems (SISs)?
A) Goal-oriented
B) Involves top management
C) Oriented toward short-term goals
D) Dynamic

Question 13
What is the difference between data and information?
A) Data consists of raw facts, while information is analysed data.
B) Data is always numerical, while information is textual.
C) Data is useless, while information is valuable.
D) Data is stored in databases, while information is not.

Question 14
Which IT job title is responsible for ensuring that information assets are protected against internal
and external threats?
A) Chief Technology Officer (CTO)
B) Network Administrator
C) Chief Information Security Officer (CISO)
D) Database Administrator (DBA)

Question 15
What is the purpose of a personnel information system (PIS)?
A) Inventory management
B) Human resource management
C) Financial forecasting
D) Sales forecasting

Question 16
Which of the following is NOT a major trend in the future outlook of information systems?
A) Declining hardware and software costs
B) Improved networking technology
C) Increased use of paper-based systems
D) Growing sophistication of hackers

Question 17
What is the role of the Internet in information systems?
A) Providing entertainment
B) Connecting users globally for communication and collaboration
C) Storing physical documents
D) Replacing all other forms of communication

Question 18
Which company uses an extranet called RetailLink to communicate with suppliers?
A) Walmart
B) Amazon
C) UPS
D) FedEx

Question 19
What is the function of CineMatch at Netflix?
A) Streaming movies
B) Personalizing movie recommendations
C) Processing payments
D) Managing customer accounts

Question 20
Which of the following is NOT a component of an information system?
A) Hardware
B) Software
C) Processes
D) Employees
Section 2: True or False Questions (20 Questions)
Question 1
Computer literacy is understanding the role of information in generating and using business
intelligence.
True / False

Question 2
Strategic information systems (SISs) focus on big-picture, long-term goals and objectives.
True / False

Question 3
Michael Porter’s Five Forces Model analyses an organization’s position in the marketplace and how
information systems can make it more competitive.
True / False

Question 4
The process component of an information system generates the most useful type of information for
decision-making.
True / False

Question 5
Information technologies can help businesses achieve overall cost leadership by reducing
operational costs.
True / False

Question 6
Data mining is a technique used to extract patterns and relationships from large datasets.
True / False

Question 7
RFID tags are less secure than barcodes because they can be easily duplicated.
True / False

Question 8
UPS uses GPS technology to optimize delivery routes and reduce left turns.
True / False

Question 9
The Internet of Things (IoT) refers to connected devices that enhance productivity and cost savings.
True / False

Question 10
Social media architects design platforms for crowdsourcing and online communities.
True / False

Question 11
ATM skimming involves recording PIN numbers and financial information using devices installed
inside or on ATMs.
True / False

Question 12
Porter’s differentiation strategy involves making products or services different from competitors.’
True / False
Question 13
Cloud computing is expected to decline in popularity due to security concerns.
True / False

Question 14
Database management systems (DBMSs) are used to create, organize, and manage databases.
True / False

Question 15
A logistics information system (LIS) improves routing and delivery schedules.
True / False

Question 16
The human element of an information system includes users, programmers, analysts, and technical
personnel.
True / False

Question 17
Business intelligence (BI) provides historical, current, and predictive views of business operations.
True / False

Question 18
Artificial intelligence (AI) will play a major role in automating data collection and analysis.
True / False

Question 19
Mobile checkout reduces the need for traditional cash registers in retail stores.
True / False

Question 20
The Five Forces Model includes buyer power, supplier power, and threat of new entrants.
True / False
Section 3: Fill-in-the-Missing-Word Questions (20 Questions)
Question 1
A ________ is a collection of all relevant data organized in integrated files.

Question 2
________ literacy is skill in using productivity software like word processors and spreadsheets.

Question 3
Transaction-processing systems (TPSs) focus on ________ and processing.

Question 4
An MIS integrates hardware, software, ________, processes, and human elements.

Question 5
________ information systems (SISs) assist organizations in achieving long-term goals.

Question 6
The Four Ps of marketing are price, promotion, place, and ________.

Question 7
The Five Forces Model was developed by ________ Porter.

Question 8
________ is the second most important resource in any organization after the human element.

Question 9
A database administrator (DBA) is responsible for ________ design and implementation.

Question 10
________ analytics helps organizations analyse marketing channels and ad campaigns.

Question 11
A point-of-sale (POS) system speeds up service by reading ________ codes on items.

Question 12
The goal of a financial information system (FIS) is to provide timely information to ________ executives.

Question 13
________ tags are increasingly used by companies for inventory management.

Question 14
The Internet of Things (IoT) connects devices through the ________.

Question 15
A personnel information system (PIS) supports decisions related to ________ resources.

Question 16
The process component of an information system converts data into ________.

Question 17
________ intelligence (BI) provides insights for effective decision-making.

Question 18
________ computing allows users to access software and storage over the Internet.
Question 19
The ________ model helps businesses analyse their competitive environment.

Question 20
________ security is becoming increasingly important as hackers become more sophisticated.
Answers

Multiple-Choice Answers
1. B
2. A
3. B
4. C
5. B
6. A
7. B
8. D
9. C
10. C
11. A
12. C
13. A
14. C
15. B
16. C
17. B
18. A
19. B
20. D

True or False Answers

1. False
2. True
3. True
4. True
5. True
6. True
7. False
8. True
9. True
10. True
11. True
12. True
13. False
14. True
15. True
16. True
17. True
18. True
19. True
20. True
Fill-in-the-Missing-Word Answers
1. Database
2. Computer
3. Data collection
4. Data
5. Strategic
6. Product
7. Michael
8. Information
9. Database
10. Web
11. Universal Product
12. Financial
13. RFID
14. Web
15. Human
16. Information
17. Business
18. Cloud
19. Five Forces
20. Cyber