Why and How Management Information System Execution Affects Corporate Performance - Term Paper Example

Name Instructors’ name Course Date Management Information System Report: Case Scenario Introduction Many researchers believe that managers as reasonable agents can never approve the adoption of management information systems that do not increase the financial performance of a company. Therefore, for the purpose of improving financial performance, MIS are considerably used in decision-making (Nayak, Sequeira and Senapati 4). Similarly, companies with the ultimate goal of improving and maintaining their overall performance financially will have to conceivably adopt MIS to a larger extent. Some empirical researches have tried to associate financial performance to new management methods or management IS in spite of the various limitations (Nayak, Sequeira and Senapati 4). With a degree of divergence in results, many researches have examined individual effect of each management method. MIS have been employed in various companies as a tool to achieve high corporate performance and to support in making corporate decisions (Nayak, Sequeira and Senapati 6). Although, the relationship between corporate performance and Management information systems requires further investigation. Talker distribution faces various challenges in executing their business operations. Some of their challenges are tied to effective and efficient service delivery due to technological issues. However, by adopting an effective management information system, the company will effectively manage business processes and increase their profits. The study examines why and how Management Information System (MIS) execution affects corporate performance. The corporate performance issues are similar with the issues affecting Talker distribution company. Therefore, by addressing the issue affecting other corporates, Talker issues are addressed. The paper draws from Talker case scenario to identify some of the most pressing challenges affecting the firm. The Present theories are employed in answering these questions which enables the study to relate corporate performance to MIS aspect. The existing methods and current studies are used in the discussion in order to expound on the relationship. The present study considers that MIS is suitable when it improves the financial performance of a company and allow it to make appropriate decisions. Talker's strategic advantages The ability to get returns on investment continuously above the average for the industry is what is referred to as competitive advantage (Nayak, Sequeira and Senapati 7). Therefore, competitive advantage can be attained through implementation of a value creating approach that is not constantly executed by the potential or upcoming competitors (Porter and Millar). Competitive advantage is brought about by strategic assets that are controlled within and allow the firm to implement and formulate strategies that increase its effectiveness and efficiency. Traditionally it has always been assumed that competitive advantage is dependent on bases such as technology, economies of scale or natural resources because they are gradually easy to imitate (Porter and Millar). Rather, according to the resource base view, competitive advantage is dependent on the rare, hard to imitate and valuable resources that are found within a company. This category of assets can be termed as unseen asses which truly are intellectual capital. The competition approach of a firm is to build up a consistent and profitable environmental market by considering several factors that are significant in becoming competitive in an industrial sector or strive for an advantageous competitive place in a certain industrial surrounding (Porter and Millar). In a market economy both competitive strategies and industry type are two essential factors to be considered by company managers. Therefore, competition strategy relies explicitly on the pursuit of advantages, of the opportunities and competitors in the market which are determined by a firm's exogenous variables that need examination (Nayak, Sequeira and Senapati 7). Competition strategy gives the firm sources of 5 sustainable competitive advantage(SCA) when a specific high value approach cannot be imitated, replicated or implemented by a potential competitor successfully (Porter and Millar). It is argued that when creating SCA both institutional and resources capital are essential. In order to understand how enterprises, maintain and develop their sources of competitive advantage the capability based view of an organization also moves a step closer. Therefore, a firm must identify its competitive advantage variables and harness it to a maximum value in order to be assured of a sustainable growth. Talker distribution offers a competitive lead over its immediate competitors. The presence of an economic channel can be confirmed by economic profit metrics and profit margins (Nayak, Sequeira and Senapati 8). The moat can be sustained provided competitors do not move directly into natural and organic food market, however that kind of competition leads to deterioration of any competitive advantage (Nayak, Sequeira and Senapati 8). The switching costs of a grocery market are essentially zero and highly competitive. Successfully firms often choose better terms from suppliers, efficiently manage their goods inventory and offering, select superior store locations and operate well organized supply chains because competitive advantages are very difficult to be gained. The network effect, regulatory safety and intellectual property among recognized industry participants are seldom consequential. Talker distribution does not enjoy the same scale as hypermarket, discount club stores and big supermarkets, such as Wal-Mart Stores Inc. 70.631%, Costco Wholesale Corporation. 167.87%, The Kroger Company 29.410.1%, and Albertsons LLC: Publix and Safeway (Porter and Millar). Although, with its focus on organic and natural foods, Talker distribution does address a more specific market which makes it advantageous over more direct competitors like Trader Joe's the Fresh Market and Sprouts farmers' markets (Porter and Millar). Therefore, a scale thus creates a relative moat to the nearest competitors, however, this moat could dissipate if the largest grocers crate a strategic push into the organic section and does not relate to the broader grocery market. Talker distribution has strong brand which is its greatest resource of competitive advantage. The company has invested heavily in customer service and store quality and has established itself as the leader in the natural and organic food segment (Tham and Chiadamrong 145). These factors have nurtured a relatively loyal customer base and differentiate it from other grocers. The company will have to continue being ranked among the industry leaders in facility investment in order to maintain this reputation (Tham and Chiadamrong 145). To keep customer service up to its high standard the Talker company will incurs high labor expenses. These drags on cash flow and earnings are partially offset by raising the pricing power. Although Talker distribution is somehow confine to a specific niche it still has a large size and a quality brand power which gives it a competitive edge over its competitors (Tham and Chiadamrong 145). Ultimately, the grocery market is mature and competitive and the competitive advantage sustainability of Whole Foods is largely dependent on the inability or unwillingness of larger competitors to address the organic market. A significant concept that illustrates the information technology’s competition roles is the value chain. The concept of value chain subdivides the firm’s activities into economically and technologically different business performance activities (Porter and Millar). The value created by an entity is measured based on the amount of money the customers are able to pay for a particular service or product (Porter and Millar). An entity will realize profits if its created value, is more than the cost to be incurred when performing the activities associated with that value (Tham and Chiadamrong 145). Therefore, for Talker distribution to gain competitive advantages of its competitors, it must perform these activities I a certain way that will lead to premium price and differentiation or perform them at a lower cost. On the other hand, information technology through information flow, enhances greatly the ability of the company to explore connections between different activities outside and within the business. Similarly, it influences the performance of individual activities (Tham and Chiadamrong 145). Talker distribution will be able to coordinate business activities between buyers and suppliers more effectively because of the creation of new activities linkages. A case that can be used to demonstrate this efficiency I the McKesson, one of the largest distributor of drugs in the world. The company provides terminals to its drugstore customers. The firm has made it so easy for clients to prepare invoices, receive and place order. This has in turn made the clients place more orders hence enabling the company to generate increased profits each year. Issues facing Talker distribution Creating a strong bargaining power with the suppliers is one of the major issues facing Talker distribution (Case Scenario: Course Work 4). The mind-set of stocking huge numbers of products makes it hard to compete the discounts that other competitors attain. Also, the company is a challenge when it comes to the technology. According to Roy Miller, an employee at Talker, the company is using the old technology in accessing record systems in central servers (Case Scenario: Course Work 4). The company data formatting and usage is not consistent especially for the company’s invoicing and pricing database. Additionally, the company is facing challenges when it comes to their delivery processes (Case Scenario: Course Work 4). The processes are not streamlined to function effectively. In several occasions clients complain of failed deliveries, and as Sam Brunswick, the Warehouse Operation Director notes, the processes should be replaced. Management of Information systems By properly analyzing an MIS performance, its success can be achieved. A great number of authors agrees with this notion and affirm directly that the objective of management information systems should be to acquire enhancement and improvement in the financial performance of a firm (Johansson, Sudzina and Pucihar 886). For example, many authors say that MIS ought to aid organization in taking more suitable decisions to improve their economic performance. The aim of management information system is to not to acquire additional precise costs, but to facilitate general organizational fiscal performance (Johansson, Sudzina and Pucihar 886). Talker distribution can obtain advantages by utilizing innovation that directly or indirectly affect indicators of economic performance. The enhancement and improvement of the possible function of the system for the purposes of improving the company’s fiscal performance, is the main objective of the MIS. These findings, taken together along with the theoretical model, have a meaningful managerial and research implications Additionally, MIS has an impact cost-based strategic performance flexibility-based strategic performance, by putting into considerations the updating customer participation and customer knowledge in management, the use and actualization of management information, the scope of increase the budget of the firm through cooperation with other units, and the decentralization of responsibilities (Johansson, Sudzina and Pucihar 888). In another research conducted to determine how composition of different teams interact with a management information system, focused on reduction of cost and flexibility, influence directly strategic performances (Johansson, Sudzina and Pucihar 888). The result obtained indicated how the impact of management system information on strategic functioning is governed and supervised by team diversity at the top management. The rate at which information is being provided by management information system is linked to potential future events, output rates, efficiency, information on the impacts of different events, and the effect that the decision of employees has on the departmental performance (Johansson, Sudzina and Pucihar 888). In addition, a greater capability of management information system leads to an increased strategic performance degree. Therefore, Talker as a food distribution company, stands a greater chance of benefitting a lot in terms of efficiency and output, if the company implements an appropriate management information system. There is a direct link between clan control, self-control, behavior control, and outcome control with the complexity moderating effect and the firm’s performance (Johansson, Sudzina and Pucihar 889). A recent research to determine whether the user assumed the development team to abide by the explained drafted rules of system development or to abide by the intelligible written steps series towards achievement of project objectives (Johansson, Sudzina and Pucihar 890). Based on the findings from earlier research on behavior, self-control, and outcome of management information system are directly linked with the project’s system performance. Nonetheless, on the correlation between control and performance intricacy risk bring about a mixed moderating effect (Johansson, Sudzina and Pucihar 891). The model of the research tried to establish if, the effects of self-control and behavior are low in the incidence of a risk with a high complexity. The interface between information technology and management control is an area with knowledge gap due to underdeveloped research concerning its impact on fiscal performance (Johansson, Sudzina and Pucihar 892). The research model currently probes the interaction impact of information integration and cost control systems on the fiscal performance of the company. In a recent research, it was found that cost control system and information technology integration have a positive impact on the distribution firms’ financial performance (Johansson, Sudzina and Pucihar 893). The information system performance and top management support is a substantial factor in establishing the efficiency of organizational information system’s role (Johansson, Sudzina and Pucihar 894). The moderating effect variables on the relationship between information system and top management support, comprehend the current and future information system portfolios, integration of the information system, structure of the information system, and the varied information management system control modes. Management information system provides necessary information for quality decision making, hence enhancing the quality of firms. Because of growth in the complexity and size of firms, organizational team leaders have lost contacts with operation scenes (Johansson, Sudzina and Pucihar 897). Management information systems avoids the conceivable uncertainty that may be brought by the swapping of detailed facts. The management information system is able to avoid this because of changing huge data amount into a compiled form (Johansson, Sudzina and Pucihar 898). At the lower levels, when there is an operation monitoring system, the decentralization of the authority is conceivable. For the purposes of making essential changes in the company’s procedures and plans, and for measuring the performance of the company, management information system is use successfully (Johansson, Sudzina and Pucihar 899). By incorporating activities that are specialized, management information system connects all centers used for decision making in the organization through retaining of each department by factoring in the needs of other departments. Management information system provides a connection between the managerial control and planning and processes, assembles, retrieves, stores, evaluates and distributes the information. It increases the management capacity to assess, improve and analyze general performance of the company. 5 Years Plan One of the major challenges facing Talker distribution is failed delivery. As a result, the company receives many complains about their mode of service delivery (Case Scenario: Course Work 4). This has negative impacts when it comes to the overall performance of the business. To address this issue, there is need to integrate an MIS in the company’s service delivery. This can be achieved by developing a price and invoice delivery system. The table below gives a summary of a 5 years MIS plan for Talker distribution Project 2017 2018 2019 2020 2021 1 (Automated Delivery Software) Business case analysis and collection of requirements Listing of minimum required items based on the Modernization Standards Reviewing & adjusting automation plan under 2 (Change Over) Development of draft and strategies for the participants’ sensitization. Data collection and assessment 3 Project (Impact Gathering of the project impacts Analysis of the project Adoption of the made changes Adoption of the changes Reporting on the project performance (Feedback) 4 Training the team managers Getting the team managers’ feedback Adoption of the MIS for delivery Implementation of the system at central level Implementation of the system at branch level, including Talker’s franchises 5 System evaluation and collection of feedback Table source: (Manea 6) Conclusion and Recommendations Talker distribution faces numerous challenges. Some of those challenges include the creation of bargaining power, use of old technology and failed delivery processes. Those challenges can easily be overcome by adopting an appropriate management information system. Through the adoption, the company can become more efficient, effective and more profitable. The notion that management information system can be applied in attainment of competitive advantage has evolved from just being a notion to a reality in distribution businesses. Acquiring competitive advantages in the information technology comprise the processing of information system’s collected data that connects the business to clients, their distribution channels and supply chains, to improve, strategize and improve relationship and performance among them. The urge to maintain the most suitable or advantageous position in the retail business has been made difficult due to the overtime reduction in cost of implementing management information system effectively. In any food industry environment, the beneficiaries of management information system are tactical, operational and strategic levels of management. With an accelerated speed of data processing and collection, management information systems have an ability to give the fundamental reports that will help to monitor continuously and constantly accurate performance of the organization. Nonetheless, Talker distribution should be able to effectively and efficiently twist management information system to fit into their business objectives in order for the company to realize the full advantages of adapting an appropriate management information system. The basic significance of an information management system depends on the accuracy of generated information. If the business requirements are realized by the information within, then the information is effectual. An effective information will enable the managers attain specific objectives. Information becomes more relevant with information integrity hence facilitating easy decision making process and knowledge increase concerning a particular product and services. Based on the highlighted Talker distribution challenges, problem analysis and the research comparison on the application of management information system in other corporates players in distribution business, the following recommendations are suggested for the: First, the company’s department of information technology should start working towards integration of the management information systems on an increased level and aim at making the company a paper-less entity. This will be achieved if the company minimize manual intervention on a daily basis and integrate technology in the business operations. Secondly, Tanker distribution should establish a web-based selling and ordering services, this will help the business to catch up with ever growing food industry. Also, it is almost certain that the current Talker’s operations are going to collapse, if the comments made by the company’s employees, is something to go by. Therefore, it is of utmost importance for the company to incorporate Web-based support while improving the management information system. Similarly, it will of high benefit if Talker distribution company could upgrade their network. In this case, the company should seek the services of the contractors such as CISCO, who are an outside contract to maintain and upgrade the company’s network. Lastly, for each upgrade made by the company, it is suggested that, Talker distribution should provide top management basic training on effective and efficient use of the added system functionalities. A manual can be drafted to guide the managers on how to use the system each time un upgrade is made. Appendix: The ‘Revised’ Bloom’s Taxonomy Types of questions and keywords: Applied as the research background questions Key words Types of questions applied Choosing Who? Describing Where? Defining Which one? Identifying What? Labeling How? Listing What is the best one? Locating Why? Matching How much? Memorizing When? Naming What does it mean? Omission Reciting Recognizing Selecting Stating Works Cited Case Scenario: Course Work. 1st ed. 2017. Print. Johansson, Björn, František Sudzina, and Andreja Pucihar. "Alignment of Business and Information Strategies and Its Impact on Business Performance". Journal of Business Economics and Management 15.5 (2014): 886-898. Web. Manea, Constantin Adrian. "Information Security Management - Part of The Integrated Management System". ACTA Universität’s Cibiniensis 66.1 (2015): 5-6. Web. Nayak, Gautham, A. H. Sequeira, and Sanjay Senapati. "Management Information System for Effective And Efficient Decision Making: A Case Study". SSRN Electronic Journal n. pag. Web. Porter, Michael E., and Victor E. Millar. "How Information Gives You Competitive Advantage". Harvard Business Review. N.p., 2017. Web. 19 Mar. 2017. Tham, Tran Thi, and Navee Chiadamrong. "Relationships Between Supply Chain Capabilities, Competitive Advantages, And Business Performance: An Exploratory Study of The Food Industry in Vietnam". International Journal of Logistics Systems and Management 25.2 (2016): 145. Web. Read More