St Joseph’s College

B Katihalli, Near Dairy Circle, Hassan 573201

Study Material

Management Information Systems

Chapter 1

Prepared by -

Ms Jenisia Fathima Lasrado

(Faculty - Department of Management)
INTRODUCTION TO MANAGEMENT INFORMATION SYSTEMS

Introduction:
❖ Today the need for updated information has become inevitable to arrive at an effective decision in all
walks of life. Whether it is industry, commerce, defence, banking, education, economics or politics,
information is needed everywhere.
❖ Information is live as it is required to be updated all the time and is renewable.
❖ The exponential growth of information makes it necessary that information is collected, stored and
retrieved in various fields when needed.
❖ For example
(a) In the setting of a new industry, information regarding the choice of technology, skill, money and
material becomes an important requirement for its growth and smooth functioning.
(b) In a competitive market, before deciding about the price of an item, the producer needs information
about the pricing policy of the competitors, specially of competitive products, sales techniques etc.

Meaning of MIS:

Management
Management has been viewed as a function, a process, a profession and a class of people. It refers to the kind of
task and activities that are performed by managers. The specific nature of the activities is determined by such
managerial functions as planning, organising, directing, and controlling.

● Planning: Decide in advance the future course of action.

● Organising: Assigning jobs and responsibilities among personnel.
● Directing: Providing leadership, guidance and motivation to employees.
● Controlling: Checking the progress of plans and correcting any deviations.

The management can be group into 3 hierarchical levels –

Top Management: - It establishes the policies, plans, objectives and budget framework under which various
departments will operate the organisation.

Middle Management: - It has the responsibility of implementing the policies and overall plans of the top
management.

MIS - Chapter 1 - Jenisia Fathima Lasrado

Junior/operational Management:-It has the responsibility of implementing day to day operations and decisions
of the middle management to produce goods and services to meet the revenue, profit and other goals.

Information:
● Information is the result or product of processing data. Information can be defined as the data which is
organised and presented at a time and place so that the decision-maker may take necessary act.
● Information consists of data that has been retrieved, processed or otherwise used, for informative or
inferential purposes, arguments or as a basis for forecasting.
● For example, some supporting documents, ledgers and so on, which comprise source material for profit
and loss statements may be used by the decision maker for profit planning and control.

System:
● A system is a group of elements or components joined together to fulfil certain functions.
● A system is made up of sub-system. The systems are either natural or man-made.
● A sub-system which may be composed of further sub-systems. A subsystem itself is part of a super
system.
● For eg: in an industry there may be several subsystems like production, marketing, human resources,
financial etc.
● These subsystems may be further divided into many more subsystems.
● For eg: production subsystems may be further divided into production control, material control, quality
control etc.

Information system:
● Information systems form a special class of systems whose main objective is to store, retrieve, process,
communicate and secure data.
● Information systems are housed in a computerized environment/platform to enable users to get faster
and accurate information

Management Informations Systems:

● Information systems, which help management at different levels to take suitable decisions are called
Management Information Systems or MIS.
● Management information systems are used by the management to acquire information for making
decisions.
● Typically, management information systems do not have a direct decision support role, apart from
helping in decision-making by supplying the right information.
● The MIS is an integrated man machine system that provides information to support the planning and
control functions of the managers in an organisation.

MIS definition
● MIS can be defined as the combination of human and computer based resources that results in the
collection, storage, retrieval, communication and use of data for efficient management of operations and
business planning.
● Schwartz: ‘MIS is a system of people, equipment, procedure, documents and communication that
collects, validates, operates on transformers, stores, retrieves and presents data for use in planning,
budgeting, accounting, controlling and other management processes’.
● Jerome Kanter: ‘MIS is a system that aids management in making, carrying out and controlling
decisions’.

MIS - Chapter 1 - Jenisia Fathima Lasrado

 ● Davis and Olson: ’MIS is an integrated user machine system designed for providing information to
support operational control, management control and decision making functions in an organisation. The
information systems make use of resources such as hardware, software, man, procedures as well as
suppliers’.

Management Information Systems (MIS) Concept

The concept of the MIS has evolved over a period of time comprising many different facets of the
organizational function. MIS is a necessity in all the organizations. The initial concept of MIS was to process
the data available in the organization and present it in the form of reports at regular intervals. The system was
largely capable of handling the data from collection to processing. It was more impersonal, requiring each
individual to pick and choose the processed data and use it for his requirements.

This concept was further modified when a distinction was made between data and information. Information is a
product of an analysis of data. This concept is similar to a raw material and the finished product. However, data
can be analyzed in a number of ways, producing different shades and specifications of the information as a
product. It was, therefore,
demanded that the system concept be individual- oriented, as each individual may have a different orientation
towards the information.

This concept was further modified, that the system should present information in such a form and format that it
creates an impact on its user, provoking a decision or an investigation. It was later realized that even though
such an impact was a welcome modification, some sort of selective approach was necessary in analysis and
reporting. Hence, the concept of exception reporting was imbibed in MIS. The norm for an exception was
necessary to evolve in the organization. The concept remained valid till and to the extent that the norm for an
exception remained true and effective. Since the environment turns competitive and is ever changing, fixation
of the norm for an exception becomes a futile exercise at least for the people in the higher echelons of the
organization. The concept was then evolved that the system should be capable of handling a need based
exception reporting. This need may be either of an individual or a group of people. This called for keeping all
data together in such a form that it can be accessed by anybody and can be processed to suit his needs. The
concept is that the data is one but it can be viewed by different individuals in different ways.

Over a period of time, when these conceptual developments were taking place, the concept of end user
computing using multiple databases emerged. This concept brought a fundamental change in MIS. The change
was decentralization of the system and the user of the information becoming independent of computer
professionals. When this becomes a reality, the concept of MIS changed to a decision making system. The job
in the computer department is to manage the information resource and leave the task of information processing
to the user. The concept of MIS in today’s world is a system which handles the databases, provides computing
facilities to the end user and gives a variety of decision making tools to the user of the system and also enables
the citizens / beneficiaries to use the MIS from external sources and connect with organizations.

The concept of MIS gives high regard to the individual and his ability to use information. MIS gives
information through data analysis. While analyzing the data, it relies on many academic disciplines. These
include the theories, principles and concepts from the Management Science, Psychology and Human Behavior,

MIS - Chapter 1 - Jenisia Fathima Lasrado

making the MIS more effective and useful. These academic disciplines are used in designing the MIS, evolving
the decision support tools for modeling and decision making.

The foundation of MIS is the principles of management and its practices. The concept of management
Information System can be evolved for a specific objective if it is evolved after systematic planning and design.
It calls for an analysis of a business, management views & policies, organization culture and the management
style. Information should be generated in this setting and must be useful in managing the business. This is
possible only when it is conceptualized as a system with an appropriate design. MIS, therefore, relies heavily
on the systems theory and offers solutions to handle the complex situations of the input and output flows. It
uses theories of communication which helps to evolve a system design capable of handling data inputs,
processes, and outputs with the least possible noise or distortion in transmitting the information from a source
to a destination. It uses the principles of system Design, Viz., an ability of continuous adjustment or correction
in the system in line with the environmental change in which the MIS operates. Such a design helps to keep the
MIS tuned with the business management needs of the organization.

The concept, therefore, is a blend of principle, theories and practices of the Management, Information and
System giving rise to a single product known as Management Information System (MIS).

Evolution of MIS:
● In the 50s and 60s many organizations realized the potential of computers to process large amounts of data
speedily and accurately.
● Until the 1960s the role of most information systems was simple, they were mainly used for Electronic Data
Processing (EDP), purposes such as transactions processing, record keeping and accounting. Electronic Data
Processing (EDP) is often defined as the use of computers in recording, classifying, manipulating and
summarizing data. It is also called as Transaction Processing System (TPS), Automatic Data Processing or
Information Processing.
● Transaction Processing Systems process data resulting from business transactions, they update the
operational databases and produce business documents. (Examples: sales and inventory processing and
accounting systems)
● In the 1960s the concept of Management Information System (MIS) was born. The new role focused on
developing business applications that provided managerial end users with predefined management reports
that would give managers the information they needed for decision making purposes.
● By the 1970s these predefined management reports were not sufficient to meet many of the decision-making
needs of the management. In order to satisfy such needs the concept of Decision Support System (DSS) was
born. Decision Support Systems (DSS) provide interactive support for the decision making processes of
managers and other business professionals (Examples: product pricing, profitability forecasting and risk
analysis system)
● In the 1980s the introduction of micro computers into the workplace ushered in a new era which lead to a
profound effect on organizations. The rapid development of microcomputer processing power (Example
Intel Pentium microprocessor) application, software packages (Example Microsoft Office) and

MIS - Chapter 1 - Jenisia Fathima Lasrado

 telecommunication networks gave birth to the phenomenon of end user computing. End users could now use
their own computing resources to support their job requirements instead of waiting for the indirect support of
a centralized corporate Information Services Department.
● Executive Information Systems provide critical information from MIS, DSS and other sources tailored to the
information needs of executives (Examples: systems for easy access to analyze business performance actions
of all competitors and economic development to support strategic planning)
● Expert systems - knowledge based systems that provide expert advice and act as an expert consultant to
users. (Examples: credit application advisor process monitor and diagnostic maintenance systems).
● Knowledge management systems are knowledge based systems that support the creation, organisation and
dissemination (the action or fact of spreading something, especially information, widely.) of business
knowledge within the enterprise (Examples: intranet access to best business practices, sales proposal
strategies and customer problem resolution systems.
● The mid to late 90s saw the revolutionary emergence of Enterprise Resource Planning (ERP) systems. This
organisation specific form of a strategic information systems integrates all facets of a firm including its
planning, manufacturing. sales resource management, customer relations, inventory control, order tracking,
financial management, human resources and marketing, virtually every business function.
● The rapid growth of internet, intranet, extranet and interconnected global networks in the 1990s dramatically
changed the capabilities of information systems in business. Internet based and web enabled enterprise and
global electronic business and commerce systems are becoming commonplace in the operations and
management of today's businesses. enterprises.
● The internet and related technologies and applications have changed the way businesses operate and people
work and how Information Systems support business processes, decision making and competitive advantage.
Today many are using internet Technologies to web enabled business processes and to create innovative
e-business applications.
● E-business is a use of internet Technologies to work and empower business processes Electronic Commerce
and Enterprise collaboration within a company and with its customers, suppliers and other business
stakeholders. The internet and internet like networks those inside the Enterprise (intranet) and those between
an enterprise and its trading partners (extranet) have become the primary information technology
infrastructure that supports e- business application of many companies. The companies rely on e-business
applications to re-engineer internal business processes, Implement electronic Commerce systems with their
customers and suppliers and promote enterprise collaboration among business teams and work groups.

Significance & need for MIS in a Company

To facilitate the management decision making at all levels of the company, the MIS must be integrated. MIS
units are company wide. MIS is available for the Top management. The top management of the company
should play an active role in designing, modifying and maintenance of the total organization wide
management information system. Information systems and Information technology have become a vital
component of any successful business and are regarded as major functional areas just like any other functional
area of a business organization like marketing, finance, production and HR. Thus it is important to understand

MIS - Chapter 1 - Jenisia Fathima Lasrado

the area of information systems just like any other functional area in the business. MIS is important because
all businesses have a need for information about the tasks which are to be performed. Information and
technology is used as a tool for solving problems and providing opportunities for increasing productivity and
quality. Information has always been important but it has never been so available, so current and so
overwhelming. Efforts have been made for collection and retrieval of information, However, challenges still
remain in the selection, analysis and interpretation of the information that will further improve decision making
and productivity.

MIS for a Business Organization :

1. Support the Business Process : Treats inputs as a request from the customer and outputs as services to
customers. Supports current operations and uses the system to influence further ways of working.

2. Support Operation of a Business Organization : MIS supports operations of a business organization by

giving timely information, maintenance and enhancement which provides flexibility in the operation of an
organization.

3. To Support Decision Making : MIS supports the decision making by employees in their daily operations.
MIS also supports managers in decision making to meet the goals and objectives of the organization. Different
mathematical models and IT tools are used for the purpose of evolving strategies to meet competitive needs.

4. Strategies for an Organization : Today each business is running in a competitive market. MIS supports the
organization to evolve appropriate strategies for the business to assented in a competitive environment.

Objectives of MIS
1. Data Capturing : MIS captures data from various internal and external sources of organization. Data
capturing may be manual or through computer terminals.

2. Processing of Data : The captured data is processed to convert into required information. Processing of data
is done by such activities as calculating, sorting, classifying, and summarizing.

3. Storage of Information :
MIS stores the processed or unprocessed data for future use. If any information is not immediately required, it
is saved as an organization record, for later use.

4. Retrieval of Information :
MIS retrieves information from its stores as and when required by various users.

5. Dissemination of Information :
Information, which is a finished product of MIS, is disseminated to the users in the organization. It is periodic
or online through computer terminals.

MIS - Chapter 1 - Jenisia Fathima Lasrado

Characteristics/ Features of MIS :
1. Systems Approach : The information system follows a systems approach. Systems approach means taking a
comprehensive view or a complete look at the interlocking sub-systems that operate within an organization.

2. Management Oriented : Management oriented characteristic of MIS implies that the management actively
directs the system development efforts. For planning of MIS, a top-down approach should be followed. Top
down approach suggests that the system development starts from the determination of management‘s needs
and overall business objective. To ensure that the implementation of the system's policies meet the
specification of the system, continued review and participation of the manager is necessary.

3. Need Based : MIS design should be as per the information needs of managers at different levels.

4. Exception Based : MIS should be developed on the exception based also, which means that in an abnormal
situation, there should be immediate reporting about the exceptional situation to the decision –makers at the
required level.

5. Future Oriented : MIS should not merely provide the past of historical information; rather it should
provide information, on the basis of future projections on the actions to be initiated.

6. Integrated : Integration is significant because of its ability to produce more meaningful information.
Integration means taking a comprehensive view or looking at the complete picture of the interlocking
subsystems that operate within the company.

7. Common Data Flow : Common data flow includes avoiding duplication, combining similar functions and
simplifying operations wherever possible. The development of common data flow is an economically sound
and logical concept, but it must be viewed from a practical angle.

8. Long Term Planning : MIS is developed over relatively long periods. A heavy element of planning should
be involved.

9. Sub System Concept : The MIS should be viewed as a single entity, but it must be broken down into
digestible sub-systems which are more meaningful.

10.Central database : In the MIS there should be common database for whole system

MIS - Chapter 1 - Jenisia Fathima Lasrado

Subsystems of MIS:
Systems may consist of numerous sub-systems, each of which has elements, interactions, and objectives.
Subsystems perform specialized tasks related to the overall objectives of the total system. A system exists on
more than one level and can be composed of subsystems or element parts.
Following are the subsystems of the Management Information System:

1. Transaction Processing System - A transaction is defined as an exchange between two or more business
entities. Overall transaction processing, also known as data processing, reflects the principal business
activities of a firm like - sales, production, inventory, shipping, receiving, billing, accounts payable, accounts
receivables, payroll, general ledger, etc. Transactions are important events for an organization, and collecting
data about them is called transaction processing. Transaction Processing System's primary purpose is to
record, process, validate, and store transactions that take place in the various functional areas of a business
for future retrieval and use. Transaction processing systems are cross-functional information systems that
process data resulting from the occurrence of business transactions.
○ A TPS records internal and external transactions for a company.
○ A TPS performs routine and repetitive tasks. It is mostly used by lower-level managers to make
operational decisions.
○ Transactions can be recorded in batch mode or online. In batch mode files are updated periodically; and
in online mode, each transaction is recorded as it occurs.
○ TPS is a six-step process - Data entry, Data capture, Data validation, Processing and re-validation,
Storage, Output generation, and Query support.

2. Management Reporting System - Management Reporting Systems are the most elaborate of
management-oriented MIS components. Its main objective is to provide lower and middle management with
printed reports and inquiry capabilities to help maintain operational and management control of the
enterprise.
○ MRSs are usually developed by information system professionals, rather than by end-users.
○ MRSs are oriented towards reporting on the past and the present, rather than projecting the future.
○ MRSs largely report on internal company operations.
○ MRSs generally have limited analytical capabilities.
○ MRSs do not directly support the decision-making process
○ MRSs provide Scheduled or Periodic Reports, Exception Reports, and Demand or Ad-hoc Reports.

3. Decision Support System - Decision Support Systems are a class of computerized information systems that
support decision-making activities. DSS are interactive computer-based systems and subsystems intended to
help decision-makers. A DSS may present information graphically and may include an expert system or
artificial intelligence. DSS tends to be designed primarily to serve management control level and strategic
planning level managers.
○ DSSs support for decision-makers in semi-structured and unstructured problems.
○ DSSs are more focused on specific decisions rather than routine flows of information.
○ DSS presents information graphically and may include an expert system or artificial intelligence.
○ DSSs are adaptive over time.

MIS - Chapter 1 - Jenisia Fathima Lasrado

4. Office Information System - Office Information System is an information system that uses hardware,
software, and networks to enhance workflow and better communication between employees. Office
automation refers to the application of computer and communication technology to office functions. Office
automation systems are meant to improve the productivity of managers at various levels of management by
providing secretarial assistance and better communication facilities. Office automation systems are the
combination of hardware, software, and people in information systems, that process office transactions and
support office activities at all levels of the organization. These systems include a wide range of support
facilities, which include word processing, electronic filing, electronic mail, message switching, data storage,
data and voice communication, etc.

5. Business Expert System - The business expert system is a knowledge-based information system that uses
its knowledge about a specific, complex application area to act as an expert. This system is one of the
knowledge-based information systems. The expert system provides decision support to managers in the form
of advice from an expert in a specific problem area. Expert systems find application in diverse areas, ranging
from medical, engineering, and business.

MIS and other Academic disciplines:

The disciplines related to MIS are:
1. Managerial Accounting:
● This branch of accounting is concerned with cost analysis and its behavior which is useful for
managerial decisions.
● Cost analysis is used in managerial accounting to determine the most relevant cost for decision
making.
● It employs techniques such as capital budgeting, break-even analysis, transfer pricing etc. It is
mainly oriented towards internal management and control and is therefore closely identified with
MIS.
● Managerial accounting knowledge is of great help in ascertaining the information requirements,
carrying analysis, in designing forms for procuring and providing information. In fact, a managerial
accountant has a clear-cut knowledge about the relevant and specific information requirement of
executives for performing functions in different departments.
● For example, to determine the breakeven point the information required is about fixed cost, variable
cost, and selling price of product. He also knows the sources of information availability. All these
facts known to managerial accountants were utilized in the evolution of MIS.

2. Management Science:
● It means the application of scientific method and quantitative analysis techniques (or Operations
Research Techniques) to management problems. The use of management science methods
emphasize on the use of systematic approach to problem solving and application of scientific
method to investigation. It utilizes mathematical and statistical procedures for analyzing problems.
Finally, it aims at achieving optimal decisions.
● Management techniques were incorporated in the MIS design to make quantitative and analytical
information available to the users of MIS. The information system so designed promoted
quantitative information and procedures, to facilitate model building for future plans and activities
and to simulate the real situations even before they occur.

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3. Management Theory:
● There were several management theories-behavioural theory, empirical theory, decision theory,
quantitative theory and management process theory. According to decision theory, the most
important task of managers is to make decisions.
● The second theory known as ‘Management process’ is the most widespread approach to
management. Under this management is defined in terms of what managers do. According to this,
management performs the functions of planning, organizing, staffing, directing and controlling.
● The knowledge of these management theories enabled the MIS designers to ascertain the type of
decisions made and functions performed by executives in business organizations.

4. Computers:
● Computers were not originally planned for processing information but today this is the major use for
which they are applied in business situations. The reasons for this are their speed of processing,
calculating, and the retrieval of data. In fact, computer technology has been considered a major
factor in MIS development. It has come-out as a significant tool in information processing and
storage.

Components/ Elements of MIS and their relationship:

A management information system is made up of five major components namely people, business processes,
data, hardware, and software. All of these components must work together to achieve business objects.

People – these are the users who use the information system to record the day to day business transactions. The
users are usually qualified professionals such as accountants, human resource managers, etc. The ICT
department usually has the support staff who ensure that the system is running properly.

Business Procedures – these are agreed upon best practices that guide the users and all other components on
how to work efficiently. Business procedures are developed by the people i.e. users, consultants, etc.

Data – the recorded day to day business transactions. For a bank, data is collected from activities such as
deposits, withdrawals, etc.

Hardware – hardware is made up of the computers, printers, networking devices, etc. The hardware provides
the computing power for processing data. It also provides networking and printing capabilities. The hardware
speeds up the processing of data into information.

Software – these are programs that run on the hardware. The software is broken down into two major
categories namely system software and applications software. System software refers to the operating system
i.e. Windows, Mac OS, and Ubuntu, etc. Applications software refers to specialized software for accomplishing
business tasks such as a Payroll program, banking system, point of sale system, etc.

MIS Structure Based on levels of Management:

MIS provides useful information to the different levels of management for discharging their function more
effectively and efficiently in order to understand the design of suitable management information systems. This
means that the structure of management information can be expressed in terms of different levels of
management activity. There are three important levels of management namely strategic management,

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management control or tactical management and operational management. These levels of management activity
are discussed below.

Strategic Management
The first area of management is strategic planning level or top level management. Top level management
consists of the board of directors and other chief executives. They are ranking officers of the organization. Top
level management develops over all organizational goals, strategies, policies and objectives through long range
strategic planning. They integrate the functions of the entire organization.

Strategic managers make decisions that affect the entire organization. Their decisions may also leave a long
term impact in the organization. Here the decision maker develops objectives and allocates resources to attain
these objectives. Decisions of this type are made over a long period of time and usually involve huge
investments. Developing and introducing a new product in the market, the opening of branches abroad, mergers
or acquisition etc. are some of the examples for strategic decisions.

Management Control or Tactical Management

Management control level or middle level management decisions involve financial or [personal consideration.
They make wide ranging decisions for their subordinates on the basis of general guidelines received from the
top level management. They develop medium range plans and define the objectives of their departments. These
managers are responsible for finding the best operational measures to accomplish the strategic decisions set by
the top level management.
They make plans and compare the actual performance with standards. Then they determine variances if any and
take remedial measures to avoid them in future. For example if the top level managers make decisions
regarding the acquisition of hardware, software and imparting training to staff under him.

Operational Management:
Operational management or lower level management deals with routine activities. They make short term plans
to carry out day to day activities more effectively and efficiently. They are in charge of small groups or
subordinates. These managers’ implements policies handed over to them by their superiors. Within these
policies, they make decisions that affect their small units for a short period .Preparation of payroll and
inventory management are examples of operational control level decisions.

MIS - Chapter 1 - Jenisia Fathima Lasrado

MIS STRUCTURE - BASED ON ORGANISATIONAL FUNCTIONS
The structure of MIS can also be described in terms of organizational functions which make use of information.
The term organizational function information systems is used to describe a variety of information systems that
support an organizational function such as accounting, finance, production, marketing, human resource
management etc. Each of these functions has its own information needs.

MIS is typically an integrated combination of functional information systems that is designed to meet the info
requirements of the functional subdivisions of an organization. Each of these functions is considered as a
subsystem. These subsystems have info applications related to that function only. In addition there are common
programs applicable to all functional subsystems. Within each of these functional subsystems, there will be
applications for transaction processing, operation control, managerial control and strategic planning.

Functional Subsystems:The important functional subsystems are the following.

1.Production Subsystem:
Production info system supports the production function which includes all activities concerned with the
planning & control of the processes that produce goods or service. In the production subsystem there are
transaction processing, operation control, managerial control & strategic planning. The typical info required at
the transaction processing level is production orders. The production order is generally based on the sales
orders required by the company.

At the same time operational control level requires detailed reports comparing actual performance with the
production schedule & identifies the weak areas. However management control requires a summary report
which compares the overall performance to actual performance. Strategic planning is concerned with
simplifying, automating ,integrating many of the activities needed to produce goods.

2.Marketing Subsystem
Marketing is another important function of an organization. The success of an organization depends on the
efficiency of marketing. The marketing function of an organization is concerned with the planning, promotion
& sale of existing products in existing markets & the development of new products & new markets to satisfy
existing & potential customers. Thus marketing performs a vital function in the operation of the business
enterprise.

MIS helps analyze dd for different products in different regions. It’s mainly concerned with marketing the right
product to target customers. Marketing info system provides info for planning, control & transaction processing
in the market function. Strategic & operational info system assists marketing managers in product planning,
pricing decisions & advertising & sales promotion strategies. MIS provides info that helps management to
decide the number of sales executives to assign specific products in specific geographical areas.

The basic transaction is to be processed at transaction processing level is customer’s orders & prepares invoice
& bills. The operational control activity includes the day to day scheduling of sales & promotional activities.

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Managerial control level is concerned with comparison of overall performance with the marketing plan. They
require info relating to customers, competitors etc. consideration of new markets & new product marketing
strategies are the issues dealt at the strategic planning level.

3.Human Resource Subsystem

The HRM function is concerned with the recruitment, placement, compensation & development of employees
in an organization. It mainly helps in record keeping & employee evaluation. Every organization must maintain
the correct record of its employees, produce pay cheques & pay reports, maintain personal records & analyze
the use of personnel in business operations are the important activities done at the transaction processing level.
Management control level conducts budget analysis, turnover analysis etc & showing the variances resulting
from planned & actual performance. Strategic planning of personnel involved with the planning of alternative
strategies for recruiting, training & compensating employees. In this regard they have to collect different types
of info from external sources.

4.Finance & Accounting Subsystem

Financial subsystem undertakes the function of arranging adequate finance to the business at min cost. This
function includes granting credit to customers, cash management & financial arrangement. Accounting info
system records & reports the flow of funds through the organization on a historical basis & prepares important
financial statements like profit & loss account & balance sheet.

Transaction processing system engaged in the legal & historical record keeping & produces financial
statements. They undertake activities like order processing, inventory control, payroll & general ledger systems.
Management control level focuses on planning & control of business operations & they compare the actual cost
of financial resources with the targeted cost. The strategic planning level for accounting & finance involves the
long term strategies connected with financial & accounting matters.

5.Logistics Subsystem
The logistic subsystem includes activities like purchasing, receiving, inventory control & distribution. The
transactions to be processed are purchase requisitions, manufacturing orders, receiving reports & shipping
orders. The operational control function make use of info contained in reports like out of stock items,
overstocked items, inventory turnover reports etc managerial control level compares the planned & actual
inventory levels, cost of purchased items, stock outs etc analysis of new distribution strategies, adoption of new
policy towards the sellers are some of the common tasks dealt at the strategic planning level.

6.Information Processing Subsystems

It’s the responsibility of the info processing subsystem to provide the necessary info processing services &
resources. Typical transactions for info processing are requests for processing, changes in data & program.
Managerial control over info processing requires data on planned & actual performance. Acquisition of
hardware & software & automation of info processing etc are some of the strategic decisions to be taken at the
top level management.

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MIS - Chapter 1 - Jenisia Fathima Lasrado