What are the types of information systems used for different levels of management?

Levels of Information:- Information is processed form of data i.e. data that have been processed and shaped into a form that is meaningful to its users is known as information.

Davis and Olson have defined information as “ Data that has been processed into a from that is meaningful to the recipient and is of real or perceived value in current or prospective actions or decisions”.

Information is derived from data. For example, volume of the room is the information which can be derived from the data by using the formula

                     Volume=length x Breadth x Height

It is the main activity of the computer to process data produce useful information.

There are three levels of information systems:

1. Strategic information
2. Tactical information
3. Operational information

1. Strategic information

This level of information is needed for long range planning policies and deciding the business should take.

Strategic information is used by the top management to make plans for the organization and to ensure that the business objectives are organization and to ensure that the business objectives are achieved with the help of a system called Executive Support System.

For example, information like population growth would be of interest to the top management which is responsible for determining long range goals.

Strategic information is concerned with long term organization planning and is helpful in taking decisions that are unstructured and are made less frequently.

Strategic information is concerned with long term organization planning and is helpful in taking decisions that are unstructured and are made less frequently.

Strategic information may be used by managers to find sources of funds for carrying planned future projects. Another application of strategic information could be a decision taken to move to a new market.

1. Tactical information

Tactical information is used in making short rang decisions to run the business efficiently.

For example, sales analysis, annual financial statements are used for short range planning i.e. for months rather than years.

Tactical information is used by the middle management for ensuring that the resources are used for allocating resources and establishing controls in order to excute or implement the plans made by top level management.

Tactical information is usually used for the decision making at middle management level with the help of a system called decision Support System.

1. Operational information

Operational information is required for short term daily operations of a business organization.

It includes the information related to day to day details of the business. For example, daily absent information of employees and current stock available for sales.

Operational information is used by lower level management\mangers to ensure that assigned tasks are planned and carried out properly in the business organization.

Some of the important types of information that are required at different levels of management are as follows:

A more functional classification of information is on the basis of types of decisions.

Image Curtsey: managers.gb.com/managersimages/team4.jpg

ADVERTISEMENTS:

Information, as required at different levels of manage­ment can be classified as operational, tactical and strategic.

1. Operational information:

Operational information relates to the day-to-day operations of the organisation and thus, is useful in ex­ercising control over the operations that are repetitive in nature. Since such activities are controlled at lower levels of management, operational information is needed by the lower management.

For example, the information regarding the cash position on day-to-day basis is monitored and controlled at the lower levels of manage­ment. Similarly, in marketing function, daily and weekly sales in­formation is used by lower level manager to monitor the perform­ance of the sales force.

ADVERTISEMENTS:

It may be noted that operational informa­tion pertains to activities that are easily measurable by specific standards. The operational information mainly relates to current and historical performance, and is based primarily on internal sources of data. The predictive element in operational information is quite low and if at all it is there, it has a short term horizon.

2. Tactical information:

Tactical information helps middle level man­agers allocating resources and establishing controls to implement the top level plans of the organisation. For example, information regarding the alternative sources of funds and their uses in the short run, opportunities for deployment of surplus funds in short- term securities, etc. may be required at the middle levels of man­agement.

The tactical information is generally predictive, focusing on short-term trends. It may be partly current and partly histori­cal, and may come from internal as well as external sources.

3. Strategic information:

While the operational information is needed to find out how the given activity can be performed better, strategic information is needed for making choices among the busi­ness options.

ADVERTISEMENTS:

The strategic information helps in identifying and evaluating these options so that a manager makes informed choices which are different from the competitors and the limita­tions of what the rivals are doing or planning to do. Such choices are made by leaders only.

Strategic information is used by man­agers to define goals and priorities, initiate new programmes and develop policies for acquisition and use of corporate resources. For example, information regarding the long-term needs of funds for on-going and future projects of the company may be used by top level managers in taking decision regarding going public or approaching financial institutions for term loan.

Strategic infor­mation is predictive in nature, relies heavily on external sources of data, has a long-term perspective, and is mostly in summary form. It may sometimes include ‘what if’ scenarios. However, the strategic information is not only external information.

For long, it was believed that strategic information are basically information regarding the external environment. However, it is now well rec­ognised that the internal factors are equally responsible for suc­cess or failures of strategies and thus, internal information is also required for strategic decision making.

ADVERTISEMENTS:

Figure 1.2 represents the types of information required at different levels of managerial hierarchy.

It may be remembered that each type of information has its role to play in managerial effectiveness. Each type of information is needed with varying degree by the managers at all levels. Thus, a part of operational information may be used even by the chief executive of­ficer of a company.

The difference lies in the proportion of each type of information in the total information needs of managers at different levels of managerial hierarchy.

What are the different levels of management information system?

What are the 4 types of information systems?

What are the 3 types of management information system?

What type of information system would be used by upper level management?