CHAPTER 1 DISCUSSION QUESTIONS (m/s43)

1.1 Discuss the concept of a system and the issues of goal conflict and goal congruence

A system is a set of two or more interrelated components that interact to achieve a goal. Most
systems are composed of smaller subsystems that support the larger system. For Example, a
college of business is a system composed of various departments, each of which is a subsystem.
Moreover, a college itself is a subsystem of the university. Each subsystem is designed to
achieve one or more organizational goals. Changes in subsystems cannot be made without
considering the effect on other subsystems and on the system as a whole. Goal conflicts occurs
when a subsystem’s goals are inconsistent with the goals of another subsystem or with the
system as a whole. Goal congruence occurs when a subsystem achieves its goals while
contributing to the organization’s overall goal. The larger the organization and the more
complicated the system, the more difficult it is to achieve goal congruence
1.2 Question: Give an example of how an Accounting Information System can improve decision
making, and describe the multistep activities involved in the process.

Answer: Accounting Information System can improve decision making as it can provide
assistance in all phases of decision making. Also, reports can help to identify potential problems,
decision models and analytical tools can be provided to users, query languages can gather
relevant data to help make the decisions and various tools can help the decision maker interpret
decision model results, evaluate them, and choose among alternative courses of action.

There are multistep activities involved in the process. First and foremost, it can identify
situations requiring management action. For example, a cost report with a large variance might
stimulate management to investigate and if necessary, take corrective action. Next, it can reduce
uncertainty and thereby provide a basis for choosing among alternative actions. Also, it can store
information about the results of previous decisions, which provides valuable feedback that can be
used to improve future decisions. For example, if a company tries a particular marketing strategy
and the information gathered indicates that it did not succeed, the company can use that
information to select a different marketing strategy. Then, it can provide accurate information in
a timely manner. For example, Walmart has an enormous database that contains detailed
information about sales transactions at each of its stores. Lastly, it can analyze sales data to
discover items that are purchased together, and it can use such information to improve the layout
of merchandise or to encourage additional sales of related items. For example, Amazon uses its
sales database to suggest additional books for customers to purchase.
1.3 a. Identify the key decisions you need to make to be a successful entrepreneur, the
information you need to make them, and the business processes you will need to engage in.

Key decision to be a successful entrepreneur

The first key decision to be a successful entrepreneur is to decide the nature of the business
clearly. As the business is about new mobile phone application, so we need to categorize it as
service business. It is important to set up nature of business which will help the customers
understand our main activity of the business.

Entrepreneur must clearly define the strategic decision of business. Strategic decision is a long-
term decision that will place the business at a profitable position. Strategic decisions are
decisions that are typically laden with a lot of risk. Creating new mobile application is an
example of strategic decision.

An entrepreneur must decide the manpower to be in the business. Personnel or manpower is one
of the greatest asset of a business. Entrepreneur must make decision about recruiting and hiring
personnel. He or she must approve certain criteria and methods of hiring the most competent
employees. He must also make decision about job description, employees roles and
responsibility.

Entrepreneur have to make decisions on how they will run the business. Operational decisions
are not just decisions about administrative tasks. They include choosing the right suppliers and
distribution channels for products. Operational decision also include decision on how to market
the product and bring it closer to the target customer.

An entrepreneur must be a creative and innovative person to find and create value for his
products so that it will be profitable. He should find ways to produce the product in the cheapest
way but still in the good quality.

Information needed

Entrepreneur needs some information to make the business into reality. He or she should know
the product criteria to be created, cash flows need, market analysis, capacity need for production
and also how much profit to be earned.
Business Process

Entrepreneur should find a strategic place to set up the business. The size of the place must be
comfortable and suitable to run the business well. He must also find a good funding sources in
long-term period. He should analyze the funding term and condition before applying them.
Besides, he needs to acquire asset and equipment appropriately which help the productions run
smoothly. Surveying should be done before acquiring them. Employees or personnel should
know the scope of work properly. Entrepreneur should train their employees as required in
business production. Next, entrepreneur should come out with a good market strategy.
Advertising and promoting are crucial part to expand the business locally as well as
internationally.
1.4 Question: How do an organization’s business processes and lines of business affect the
design of its AIS? Give several examples of how differences among organizations are reflected
in their AIS.

Answer: Accounting Information System is a system that collects, records, stores and processes
data to produce information for decision makers. It includes people procedures and instructions,
data, software, information technology infrastructure and internal controls and security measures.

AIS collects information and data that will be used to make decisions and used in business
processes. Therefore, AIS should reflect the organization’s lines of business to make effective
decision.

Examples of how differences among organizations are reflected in their AIS are manufacturing
companies will need a set of procedures and documents for the production cycle but non-
manufacturing companies do not need the set of procedures and government agencies need
procedures to track separately all inflows and outflows from various funds. This is to ensure that
legal requirements about the use of specific funds are followed. Passenger service companies like
airlines and bus generally receive payments in advance of providing services. Therefore,
extensive billing and accounts receivable procedures are not needed, instead, they must develop
procedures to account for prepaid revenue.