Information Systems in Business Research Paper

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Information Systems

One of the most important elements for business organizations and companies is obtaining competitive advantage over rivals. Competitive advantage can be described as a product and/or service that a business' customers consider more valuable that similar offering from the business' rivals. Consequently, companies are constantly involved in developing measures that contribute to competitive advantages in order to achieve their respective business objectives amidst intense competition from rivals. One of the major ways that has been identified as a crucial element for obtaining competitive advantage is information systems. Information systems are regarded as critical factors for gaining competitive advantages due to their role in competitive strategy. This includes cost leadership, differentiation, innovation, growth, and strategic alliance.

Meaning of Information Systems

An information system can simply be defined as an incorporated set of components that are utilized to collect, store, and process data and to provide information, knowledge, and digital products that are used for specific identified functions and objectives. However, the actual meaning of information systems has been evolving in complexity and diversity (Callaos & Callaos, 2002, p.1). Despite the differences in the meaning of information systems due to complexity and diversity, these systems cannot exist without information or knowledge. In some cases, information systems are defined as the assembling of technical and human resources that offer necessary storage, computing, allocating, and communicating necessary information to employees or workers. This definition has resulted in the creation of management information system, which is a form of information systems that'd used to provide important information for the management of an enterprise. In other cases, information system is a common term that is used to refer to an organizational department that is responsible for data processing and systems.

The true meaning of information system is that it is an integrated series of components for gathering, storing, and processing data and for providing important information, knowledge, and electronic products. Companies and business organizations constantly depend on information systems to conduct and manage their operations, promote interactions between suppliers and customers, and enhance competitiveness in the marketplace. Information systems have not only promoted increase diversity of human activities but also had significant impact over the society. As a result, information systems have enhanced the speed of daily operations, impacted the structure and operations of business organizations, changed product choices, and changed the nature of work. The increased focus on information systems by business organizations is attributed to the economic significance and role of information and knowledge.

Information Systems' Components

Information systems are made of various components that are broadly classified into people or human resources, organization, and technology. The people or human resources in information systems are qualified personnel with an understanding of the various procedures in these systems. In most cases, information systems' human resources are technical personnel including business analysts, computer operators, database administrators, and operations managers and workers. The technology components include the basis components of a computer system i.e. hardware and software as well as databases and data warehouses. Computer hardware basically entails peripheral devices like input and output devices, processing devices, and storage devices (Hardcastle, 2008). On the contrary, computer software includes system software and application software as well as the operating system, which is the core system software. Databases and data warehouses are important components of information systems since they support the operations and management functions of the organization. The organization is an important component since it not only deals with the structure and arrangement of the information systems but also focuses on utilizing the systems towards accomplishment of specific business objectives and gaining competitive advantage.

Major Information Systems Used in Many Businesses

Organizations generally use information systems in their decision making processes in order to enhance the likelihood of achieving organizational goals and gaining competitive advantage over rivals. However, there are various types of information systems that are currently used in many businesses for various functions and objectives. One of the major information systems that are used in many businesses is Management Information System (MIS), which focuses on providing support to managerial decision making (Hardcastle, 2008). Management information systems account for a huge portion of investments in information systems by businesses because of their significance in management decision making. This kind of information systems entails the practice of combining computer systems in order to meet the strategic goals of an organization. Management information systems provide business organizations with descriptive, predictive, diagnostic, and prescriptive information that is used towards enhancing an organization's operations and ensuring the achievement of organizational goals.

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As previously mentioned, the main use of management information systems is to provide support to managerial decision making processes.

The second major information systems used in many businesses is customer relationship management systems. This type of information systems is used by business owners to harmonize sales and marketing initiatives. Unlike the management information systems, customer relationship management systems gather and track customer activities such as product defects, purchasing trends, and customer inquiries (Davoren, n.d.). Due to their capabilities, customer relationship management systems enable customers to interact with business organizations and companies to provide feedback regarding a product and/or service as well as for problem resolutions. In some cases, these systems are used internally for an organization's collaboration measures, which can take place in real time regardless of the locations of the business partners. Therefore, the main use of customer relationship management systems is to promote interactions between the business and its customers as part of efforts to synchronize sales and marketing initiatives.

The third major information systems used in many businesses is business intelligence systems whose main focus is to detect, extract, and assess data for different operational needs or requirements such as decision-making purposes. Similar to management information systems and customer relationship management systems, business intelligence systems are utilized for decision-making purposes. However, the scope of these systems varies and incorporates various operational needs. This difference is attributed to the fact that business intelligence systems are may be utilized to forecast future sales patterns, sum up present costs, and predicts sales revenues. As compared to management information systems and customer relationship management systems, the main use of business intelligence systems is for detecting, extracting, and analyzing data for several operational needs and requirements.

The fourth type of information systems that is commonly used in many businesses is knowledge management systems. Knowledge management systems differ from the other types of information systems since they are used to arrange and break down knowledge and then share or re-distribute the knowledge with the various individuals in an organization. The main objective of knowledge management systems is to enhance performance, promote innovation and integration, and retain knowledge within the company or business organization. Despite being commonly marketed to large organizations, these information systems can be used by small businesses to harvest knowledge. Since they act as a core storage area for retaining information in a standard way, knowledge management systems can enable business owners to maintain consistency while promoting speedy customer responses and partner inquiries.

The final type of major information systems used in many businesses is transaction processing systems. The main use of transaction processing systems is to meet the data collection, processing, storage, and output functions for the major operations of a business. Unlike the other information systems, transaction processing systems gather data from user inputs and then create outputs depending on the results of data collection. Moreover, these information systems can be based on batch processing or real-time and can enable business owners to meet customers' demands without need for extra personnel (Davoren, n.d.).

Business that Uses Information Systems

As previously mentioned, there are various business organizations and companies that use information systems for their businesses. An example of a business that utilizes information systems for its businesses is McDonalds Corporation. The use of information systems by McDonald's for its businesses is because of the nature of business operations at the company. As a leader in the fast foods industry, McDonalds Corporation focuses on protecting its information systems to safeguard the system from potential competitors. The nature of the company's business operations contributes to the use of various information systems by McDonalds in order to achieve its respective business goals. The major information systems utilized by McDonald's in its business include management information systems, transaction processing systems, and decision support systems.

The features of McDonalds management information systems is to provide periodic reports like the daily list of workers and their working hours and offer periodic reports of expenses against budget. McDonalds' use of management information systems is geared towards increasing profitability and providing managers while enabling employees to understand the organization's performance (Bedi, 2014). Secondly, McDonalds also utilizes transaction processing system since the nature of operations involves making exchanges between the organization and its customers. The transaction processing systems are crucial to McDonalds' operations with regards to success and productivity in the marketplace. Through this information system, the corporation collects, stores, processes, and retrieves information regarding its transactions. This information system is also used to answer everyday….....

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