How to To operate business effectively ?
Introduction to Strategic Information Management
Strategic information management (SIM) is termed as the process of integrating the applicable information so that, business can gain competitive edge in the market. To operate business effectively, the management should determine all the information regarding their target market so that, they can plan according to it and achieve the objectives (Hausmann, Williams and Hardy, 2014). Therefore, the management does not require theoretical framework for operating their business but they need precise information regarding their market trends and competitors to support their theoretical plan. Different tools like strategic information systems, operational information systems, and management information systems (MIS) render the required information to the management of the organization for taking an effective decision.
Present report focuses on the Tesco PLC which is the renowned supermarket chain in the UK and provides wide range of grocery products and services to their market customers. It is the second largest supermarket chain in the UK covering market share around 28.4%. The supermarket chain also has different stores in the international market across Asia and different region of Europe. The report will mainly concentrate on the identifying the data and information of the organization to take effective decision making within the organization.
1.1 The features of data and information
Strategic decision making is the effective process that requires processing, storing and reviewing the data and information so that, management of the organization can take proper decision (Lee, Lee and Kang, 2005). Tesco PLC is the largest supermarket chain in the UK market that serves different need of the customers. For supporting the strategic decision making in the Tesco PLC, they need proper information and relevant data. Data refers to the unstructured facts or information which is ineffective until it is being organized. The information is the processed and organized data that is useful in the organization for taking impressive decision. The theory of Russell Ackoff, has suggested that, the content in the individual mind can be classified into the four different categories that is data, information, knowledge and wisdom (Walters, Jiang and Klein, 2003).
- Data: The data simply can be termed as the raw or unstructured information that features no information. For example, for formulating the strategies to expand their activities Tesco collects the data from market customers.
- Information: Information refers to the structured or organized data which is useful for the management to take effective decisions. For example, the collected data should be sorted and categorised under different section and answer that who are the customers that will be satisfied by Tesco (Jaspers and et.al., 2004).
- Knowledge: It is deterministic process or can say application of data and information that mainly answers the “how” questions. For example, how Tesco will expand their activities the company possess required human inventory with the proper skills and capabilities to enlarge their activities.
- Wisdom: The last category includes wisdom this deals in the future as it integrates the vision.
Key features of the data and information are:
- Accessibility: The identified features of data and information are accessibility that is it should be conveniently handled and available to the Tesco organization so that, they can take proper decision (Kunnathur and Shi, 2001).
- Relevance: Another feature is that, the collected data and information about Tesco should be relevant and related so that, they can take effective decision regarding the specific purpose of expanding their activities.
- Comprehensibility: The collected data and information should be understood by the management as it will help the firm in taking effective decision (Hult, Ketchen and Slater, 2004).
- Timeliness: Another feature of data and information is that, it should be collected properly. Data or information that arrives after the decision taken by the management is of no use.
- Accuracy: accuracy is very important as the data should be correct and without any error or mistake.
1.2 Criteria to be applied when selecting the data and information to support decision making
For effective decision making, management of Tesco PLC should follow certain criteria for selecting the data and information (Lee and Pai, 2003). The different criteria for selecting data and information consist of decision action cycle that mainly include Plan, do, check and act (PDCA) and Observe orientate decide act (OODA). The decision making process of Tesco PLC includes 8 steps that include:
Identify problem: The first step in the decision making process of Tesco PLC include determining problem or to analyze the opportunities which will benefit the company. For example, with the advanced technology the company should focus on expanding the activities on the internet platform to serve their global customers (Wheelen and Hunger, 2011).
Establish decision criteria: The second step includes establishing the decision criteria by gathering the necessary information which are relevant for the organization to take decision.
Weigh decision criteria: Another step is to measure the decision criteria that are it is suitable or not for the Tesco.
Generate alternatives: After weighing decision criteria, the management should create or generate several solutions so that, Tesco should ensure online system in their organization to serve their customers (Laudon and Laudon, 2004).
Evaluate the alternatives: After generating the alternative, the management should measure the entire alternative on the basis of their feasibility and acceptability so that, they can achieve their stated objectives.
Choose the best alternative: After measuring all the alternatives Tesco PLC should choose or select the effective alternative that will assist the organization in grasping the opportunities of expanding their business in the internet platform.
Implement: After that management of Tesco PLC should properly implement the chosen alternative for organization so they can improve their performance and attract the large customers (Shapiro and Varian, 2013).
Evaluate the decision: The last step in the decision making process include evaluating the effectiveness of decision by measuring the number of customers that purchase their products through online services.
1.3 The impact of a management information system to a company
Management information system (MIS) assist the management to take effectual decisions keeping the targeted objectives of organization in the view. By adopting the MIS Tesco PLC should easily manage their all the internal activities that are essential for the success of organization.
The management information system assist the Tesco PLC in collecting the necessary information or data from inside and outside the working environment (Schultze and Leidner, 2002). After that all the assembled data are computerized, stored and measured by the management so that they should take impressive judgment. MIS also assist in integrating the activities of different department for completing the tasks as this software consume the time of department for performing the activities. In Tesco, MIS software combines the past and present data related with the sales figures or total number of human inventory in the supermarket in order to meet the changing requirement of customers.
- It increases the productivity of the Tesco PLC (Melville, 2010).
- It also assist in managing the external and internal information of the organization.
- It also help the Tesco PLC in developing their policies so that they can gain competitive advantage in the market among their competitors.
2.1 The legal responsibilities in sourcing, sharing and storing information
Tesco deals in providing the different grocery items and products to their market customers so there are certain legal responsibilities in sourcing, sharing and storing the information. The company while sourcing or sharing the information mainly focuses on the legal aspects that is confidentiality, authorised access for information, data protection etc. for this Tesco PLC should focus in the act that is:
Data Protection act 1998: This act is being framed by the UK government on processing the data or information of the identifiable living people (Luftman, Bullen and Neumann, 2004). This act also focuses on protecting the personal data of individual in the UK. This act defines eight principles that require Tesco to keep the personal information with themselves. The basis eight principles that need to be followed by Tesco PLC are:
- Information should be used fairly and lawfully
- Data should be used for the specific purposes
- Data or information should be used adequately not excessively
- Information should be accurate
- Unnecessary information or data should not being kept with the organization
- Company should handled the personal information properly
- Company or individual should keep information or data securely or safely
- Company should not transfer the information outside the UK region
2.2 When information should be offered and access allowed
Acquiring information, accessing and processing should be accordant to the act that is Data Protection Act, which gives the precise right to Person and organization to know what information or data need to be handled and which data need to be disclosed to the other parties (Pearlson and Saunders, 2004). The information of the Tesco PLC should be offered and access allowed in terms of radical or ethnic origin, sexual life, criminal offences etc. the information offered to their customers and stakeholder should be:
- Accurate: The data or information should be accurate and disclosed to the third party or the individuals.
- Fairly and lawful process: The information offered to the different customers and stakeholder should be fair so that they can sustain their customers.
2.3 The formats in which information can be offered
Tesco PLC collects and stores the information related with the units and costs in the different formats (Piccoli and Ives, 2005). These formats are also effective within the company so that they should make effective decision. The four formats in which the information or data regarding the customers preference can be offered are:
Structured format: Structure data format is the one that mainly serve the information or data in the sequential manner or proper database structure. It may be in form of tabular formats or presented in the database format. The structured data are the effective in which information should be offered properly to the management or other authorities of Tesco PLC so they can take effective decision (Somogyi and Galliers, 2012). Through structured format all the collected information should be separated according to their relevancy and stored in the proper format or database.
Unstructured: The unstructured format are opposite to the structured format. In this format data or information are not presented in the structured or sequential format. These are also termed as the costly form of data because the unstructured format require more time and cost to handle the relevant information needed by the Tesco for supporting their decision making process (Wade and Hulland, 2004).
Electronic/ manual: In the electronic format the information offered to the management or customers is with the help of different electronic means like E-mail, database etc. while, the manual format of the information is being provided on the printed paper that is handwritten logs,s reports, letters etc. this format is economical in nature as it require huge cost associated with maintaining and storing the information (Ensour and alinizi, 2014).
Document format: The another format of the offering information of Tesco PLC to their management include computer generated document. The application program save the data or information with the unique data file name. This unique name of the file will assist the authority of the organization in recovering the document.
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3.1 Analyses the information to identify trends and patterns
An in-depth analysis of information is necessary to generate valid and reliable outcomes. The wide range of information is available for the organization through its internal and external sources. In order to analyse the available information, the researcher needs to determine adopt appropriate techniques (Alcami and Caranana, 2012). The financial information is extracted for Tesco for last five years. The table presented below indicates figures for revenue and business profitability during last five years. Moreover, the financial data is presented in graphical form so as to conduct evaluation of business performance.
It can be said that competition within retail sector is increasing on continuous basis. This in turn leads to reduction in sales for Tesco in year 2015 (Hausmann, Williams and Hardy, 2014). The business unit should therefore emphasize on creation of strategy that provides an edge over competitors. The increased level of revenue is expected to support business operations for long run.
Profitability of the organization corresponds to revenue earned during the years. The graphs presented above indicate that the business unit has incurred losses in year of 2015. It is with decrease in revenue that profits within organization have reduced. It is seen that operating and net profit is moving is same direction. The decreased level of revenue results in incurring losses for the organization (Al-Aboud, 2011).
As per the analysis of financial information, it is seen that Tesco needs to improve quality of products and services. The organization needs to create an edge over competitors so as to increase market share. It is with increasing business revenue that the organization is able to achieve its objectives. The graphical analysis indicates that the revenue should be increased in order to improve business profitability (Lee, Lee and Kang, 2005).
3.2 Sources available to assist in analysing the information
The financial information is considered to be highly important in nature. It is through analysis of financial information that the organization is able to achieve its objectives. The financial information for Tesco is extracted from Morning star. The information that is extracted is analyses by way of graphical analysis. The bar graphs help in developing an understanding of trends followed by revenue and profits. The year-on-year figures for revenue and profits indicate the growth achieved on part of the organization (Dufner, Holley and Reed, 2002).
The analysis of financial information is possible through graphical presentations. It can be claimed that financial estimations and graphical presentation helps in generating valuable outcomes for field of the study. The range of sources is available with researcher so as to evaluate the financial data (Walters, Jiang and Klein, 2003). This in turn helps in deriving valid outcomes and supporting decision making on the business end. In case of Tesco, it is seen that the business revenue is decreasing in year 2015. It is with decreasing revenue the profitability of organization has reduced during the financial year. The business unit should therefore formulate effective strategies so as to achieve success in long run. The organization can divert its attempts to increase revenue so as to improve profitability on annual basis.
It can be said that availability of relevant information and its analysis helps the organization in deciding future course of action (Jaspers and et.al. 2004). The business unit is able to effectively plan its strategies through evaluation of relevant information. It can be claimed that the financial information determines growth of the organization. Besides, market and customer information, human resource information, management supply information and accounting information can be evaluated to frame effective policies on part of the organization. It can be therefore claimed that analysis of relevant information helps in deciding future course of action for the organization. The business unit should therefore strive to analyse the information related to business operations. This in turn helps in formulation of effective strategies on part of the organization (Kunnathur and Shi, 2001).
4.1 Range of decision making tools and techniques available to support a strategic decision
Tesco manager frequently use a variety of tools and techniques to help in devising strategically planning decisions. The different range of the decision making tools and techniques that are available to the Tesco PLC to support the strategic decision include SWOT analysis, market research and cost benefit analysis. One of the effective decision making tool is accessing the strength and weaknesses of the organization and also their various threats and opportunities (Hult, Ketchen and Slater, 2004). This will help the Tesco manger in taking advantage of their strength and framing strategies so that they can reduce the weaknesses. Measuring extraneous threats and opportunities of the Tesco PLC help in the process of strategic decision-making, as it permit the managers to design the things that will help the organization to gain competitive advantage. Another decision making technique include conducting market research. It is the tools that help the Tesco PLC in gathering the information regarding the taste and preferences of the customers that will help the managers in creating objectives and strategies that would meet the requirement of customers. Another tools and technique of decision making include cost-benefit analysis it is a strategic decision-making instrument that consists of measuring the costs and benefits related to different suitable action and selecting the appropriate course of action that outcome in gaining net benefit (Lee and Pai, 2003). For example, if Tesco PLC managers anticipate that a project would cost $100,000 and outcome in gaining the $120,000 benefit and the second plan undertake the cost $90,000 and outcome in gaining the benefit of $125,000 then the managers of the company would ensure selecting the second project as compared to the first project because the net benefit of the second project is higher than the first project. Marchand has proposed the three different levels of decision making that is operational, competitive and strategic. Operational level decisions are taken by the lower level employees that deal in selling the product directly to the customers. On other hand, the competitive decisions are taken by the managers so that they should ensure in gaining competing edge in the market (Wheelen and Hunger, 2011).
4.2 Methods of evaluating management information within a company
For advanced level of administration information Tesco utilize various information assessment methods to assure the dependable, trusted and superior of management information system (MIS). Writers like Cashmore and Lyall has identified the three levels of business environmental flow of information that is external, internal and corporate level of information.
The external level of information focuses on the flowing of information outside the Tesco organization among their market customers (Laudon and Laudon, 2004). The external information should focuses on the offering the information to their different stakeholders and the customers so they can serve their requirement effectively. The another level of management information flow is internal in which the management information flow inside the organization so that senior management should focuses on the effective decision making processes (Shapiro and Varian, 2013). The last level of business environmental information flow is at the corporate level in which information flow among the corporate sector among the different competitors.
The method of evaluating management information within the company is through Data governance (DG). It refers to the overall administration of the data or information employed in the Tesco PLC. It also ensures that the employed data or information is accurate, usability and also ensure proper security so that it may not be modified or changed by the any third party. The worth of management information within the Tesco PLC includes timeliness, adequate content, proper format and cost (Schultze and Leidner, 2002).
5.1 Methods of developing information capture to inform and support strategic decision making
There are different methods for developing information capture to inform and support the strategic decision making include:
Questionnaire: one of the effective method of processing the information captured include questionnaire. It is the effective methods that is being used by the Tesco PLC to gain the information and data regarding the expectation and the needs of their market customers (Melville, 2010). Through questionnaire Tesco collect the necessary information by their customers this gathered information through questionnaire will assist in supporting the strategic decision making process of the Tesco PLC. The advantage of the questionnaire method includes that it attract the large number of random customers and collect the reliable information. While, the weaknesses of the questionnaire method is that it result in the misinterpretation as the questions can not be explained to the individual.
Environmental scanning: Another method of capturing the information is through environmental scanning (Luftman, Bullen and Neumann, 2004). Tesco PLC scan the environment to understand the internal and external factors that may be develop to improve the performance of the organization. Through environmental scanning Tesco should determine the internal and external factors that will help the management in planning or designing the future course of activity. The advantage of the environmental scanning is that it will assist the Tesco in making the effective decision making for the success of the organization among competitors. Another advantage of environmental scanning include it help the Tesco in planning or developing the long term strategy for the business (Pearlson and Saunders, 2004).
5.2 Processes for analysing impact of information on strategic decisions made
For analysing the impact of information on the strategic decision made, Tesco PLC should focuses in the following steps like:
Setting objectives of process: The decision maker of the Tesco PLC should focuses on developing or setting the objective and also aligns the different resources top accomplishing the objectives and goals of the company. The management of the organization may get benefit from measuring the information that is used in the strategic planing (Piccoli and Ives, 2005).
Evaluate the goals: Another step in the process for analysing impact of the information in strategic decision made include evaluating the goals and objectives. The information system permit the Tesco organization to assess that weather the desirable objectives are accomplish or not. In case of non-achievement the procedure is refined with employing more resources, expertise to make confident that Tesco PLC result in the quality achievement of gaols. Even the company adopt gap analysis for the assessment that goals have being achieved or not (Somogyi and Galliers, 2012).
Assessing the reasons for variance: Another step in the process include measuring the reasons for generating the poor quality result in terms of decreasing the sales and revenue of the Tesco PLC.
Revise and implement new approaches: The last step in the process includes revising or implementing the new goals and objectives of the Tesco PLC so that they should assess the correct and accurate information so that company should make strategic decision (Wade and Hulland, 2004).
Another effective process includes accessing the strength and weaknesses of the organization and also their various threats and opportunities. This will help the Tesco manger in taking advantage of their strength and framing strategies so that they can reduce the weaknesses. Measuring extraneous threats and opportunities of the Tesco PLC help in the process of strategic decision-making, as it permit the managers to design the things that will help the organization to gain competitive advantage.
From the above report it has been concluded that to operate business effectively, the administration should find out all the information and data regarding their marketplace and competitors so that, they can programme accordant to it and accomplish the goals. The report has also determined the different features of the data and information that is they should be accurate, relevant, timeliness etc. that will assist in taking effective decision within the organization. While, the report also concluded the different range of the decision making tools and techniques that are available to the organization that support the strategic decision includes SWOT analysis, market research and cost benefit analysis. Furthermore, the report also cover different format so that information regarding the organization can be offered to their employees and further it will be used by the organization for ensuring effective decision making process.
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