Review Question
In your own words, explain structure as it relates to decisions.
which none of the decision phases (intelligence, design, or choice) are routine or repetitive.
Figure 5.2 (page 146) summarizes several concepts introduced in this section and also helps us to understand the nature of the characteristics associated with infor- mation used by the three levels of management for decision making. Further, this fig- ure indicates the proportion of structured and unstructured decisions handled by the three management levels.
Information Qualities and Decision-Making Level
The level of the decision maker and the type of decision to be made determines the preeminence of certain information qualities. For example, strategic management may require information high in predictive value. Information used for strategic planning Business Intelligence and Knowledge Management Systems Chapter 5 145nario for the lower-level manager might include: data about raw materials on order and due in from vendors, names of vendors who can provide the raw materials, cost of an emergency order, whether this decision may be made by a lower-level manager, etc.
• The communication includes documents, presentations, meetings, and electronic interaction that initiate, conduct, or interpret the activity or decision. Communication assists in solving the prob- lem by:
1. Defining the problem by analyzing the need for communication and the audience that must be addressed. This parallels the intelligence step in decision making.
2. Generating alternative courses of action by summarizing and analyzing information. This parallels the design step in decision making.
3. Making choices, negotiating the evaluation of these alternatives, and developing support for any solution. This parallels the choice step in decision making.
Let’s summarize what we can learn from these technical communication ideas:
1. The context for problem solving (or decision making) is important. As we said when we de- scribed relevance, information, to be useful, must reduce uncertainty for this decision maker for this decision.
2. A communication’s effectiveness (or information’s effectiveness) is situational and rule-governed.
For our information to be understood by the recipient, and for the communication to have its intended effect, we must have knowledge of the attitudes and expectations of the audience of the communication.
3. Information’s relevance, usability, and understandability, indeed its value, depend on the audi- ence of the communication, not on the subject being communicated.
4. The relationship of communication and problem solving is not: “(1) I have a problem, (2) I solve the problem, and (3) I communicate the results.” Rather, the required communication—the re- quired output—determines your problem-solving activities. In Technical Communications terms, we would say, “We have a business situation (a problem) that requires a solution (an activity), and the communication (the output) determines the scenario (the problem-solving actions to be taken).”
TECHNOLOGY INSIGHT 5.1 (continued )
should help managers “see” the future and assist them in formulating long-term plans. The strategic level manager may not be as concerned with timeliness or ac- curacy and would therefore prefer a quarterly sales report to a daily report con- taining several quarters of information so that trends could be detected more easily.
Operations management must make frequent decisions, with shorter lead times, and may therefore require a daily sales report to be able to react in a timely man- ner to recent changes in sales patterns. Operations management may require more timely and accurate information and may not be concerned about the predictive value of the information. Without a certain level of accuracy, however, even the largest data warehouse will not be useful for forecasting or analysis of historical data. Technology Application 5.1 gives examples of the importance of high- quality data.
Conclusions About Management Decision Making
From Figures 5.1 and 5.2 and their related discussions, we can reach the following conclusions. In- formation needed for decision making can differ in degree of aggregation and detail, in source, and in fundamental character. We have also seen that the required quali- ties of information differ by decision type and level of management.Within the organization, managers can secure inputs to their decisions directly:
from the environment or from direct observation of operations. Managers can also receive information indirectly through the IS, which retrieves and presents opera- tional and environmental information. Environmental information is now widely available, given the ease of searching for and sharing information over the Internet.
As we understand more about the decisions to be made and can better anticipate the data needed to make those decisions, the IS can be designed to provide more of the required information.
Because data requirements for structured decisions are well defined, we strive to improve our understanding of decisions so that we can make more decisions more structured, anticipate the data needed for those decisions, and regularly provide those data through the IS.
146 Part II Technology for Business Processes and Information Systems
Figure 5.2 Management Problem Structures and Information Requirements
Unstructured decisions
Structured decisions
Undefined External Summarized Future Infrequent Less Accuracy
Well Defined Internal Detailed Historical Frequent More Accuracy INFORMATION REQUIREMENTS
Strategic manage- ment Tactical management
Operations management
Operations