Page 295 - Business Principles and Management

Unit 4

11.3 Managing with Information

Goals Terms
• Explain how management information sys- • what-if decisions • symptom
tems and business research help managers • problem
with planning and controlling activities.
• Identify the four steps in the problem-
solving process and how the process
supports decision making.

Using Management Information

To do a good job of planning, organizing, implementing, and controlling, man-
agers must have a great deal of information available. They need records on pro-
duction and sales, personnel, expenses, and profit or loss to make decisions. Data
must be collected, organized, and made available to managers so they can make
decisions quickly and efficiently.
Even in very small businesses, managers cannot remember all of the informa-
tion needed to make decisions. In large companies with many managers and hun-
dreds of employees, it is impossible to operate without a systematic way to gather
information for managers to use in decision making.

MANAGEMENT INFORMATION SYSTEMS
Management information systems were described in detail earlier in the book.
Every company needs such a system as an important management tool. Comput-
ers help managers develop effective plans and also control business operations.
Planning involves making choices. Plans should be based on information
from past experience as well as anticipated changes. With an effective manage-
ment information system, managers can use information to make what-if deci-
sions. What-if decisions explore the consequences of specific choices using
computer software. A sales manager may ask, “What if we increased sales
by 5 percent?” An analysis of the records of past costs and sales using spe-
cially designed computer software will show the manager whether the addi-
tional sales will generate more profit or not. An operations manager may ask,
“What if we replaced our old fleet of trucks with new, more fuel-efficient models?”
Again, the computer analysis will provide the needed information to determine
whether the purchase would be cost-effective.
Managers can also use information systems to reduce the amount of time
spent on controlling activities. If managers took the time to review all of the
information collected on business operations, they would have little time for
other activities. Computers can be used to monitor the performance of activi-
ties in a company. If activities are performed as planned and standards are met,
no management attention is needed. Managers should become involved only
when activities do not occur as planned or results do not meet standards. When

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