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Management information system is a computer based manual that transforms raw data into useful information that can be understood by each member of an organization. This information provides a basis for the managers where they can make decisions both major and minor concerning the company. Also management information system is a collection of all procedures, processes, storage facilities and retrieval components that can be used for decisions making and control in an organization. Other than being helpful in decision making and organizational control, MIS to managers is very important since it helps them to generate company’s reports such as the performance reports, inventory reports, financial statements, income statement and reports on performance which are required for daily purposes in the running of an organization (Lucas, 2009).
MIS helps to answer company reports such as what might happen to an organizations cash flow incase there is any changes in terms of credit allocation to its customers. This will be of much importance since the company will have to know in advance the remedies to undertake in-case of the demise. The most common MIS used for decision making by most companies and organizations is one known as Decision Support System (DSS).DSS integrates the decision maker, the company’s data base and the quantitative models being used. Since MIS also provides a company’s historical performances it will enable the managers to look back and try to critically analyze the main cause of under performance in the company and try to find an ending solution to the problem. This always secures them from the same happenings in the near future.
MIS serves the five functions of management; planning, organizing, staffing, directing and controlling at the top management level. For example the system can be developed to provide support to top most management in planning the company’s strategies, it can also be designed in a manner that a manufacturing plant can use to monitor and control its operations without necessarily being there physically, a well designed MIS also connects the top management with the accounts department to reflect any transaction that is being undertaken by the junior management, it provides updates on the daily transactions needed for the continuity of the business such as, payroll, petty cash outflow, daily sales orders, shipping and office automation systems. Initially the core purpose of a well defined MIS is to enable members of an organization to share all the information among themselves (Schniederjans, 2004).
MIS has enabled managers to use the current technology in developing new products and services that are much more competitive than their counterparts in the market; it has also enabled managers to make well analyzed decisions concerning the market and their competitors. For example good use of MIS enables a company to be more innovative in the market by providing unique products and services that meets the customer’s needs. This raises the market costs and the company can take advantage as their competitors try to cut in. Also managers can strategically use MIS to forge electronic linkages to consumers and the suppliers thus locking in the business and increase switching costs (Pride, 2009).
Managers can also use MIS to change the overall basis of market competition. For example in a market where there is a tug of war in prices, a business with new means of processing customer data may create features that will change the rate of competition. MIS has enabled managers to develop Knowledge Management a concept that provide decision making tools and data to people at all levels of management. Knowledge Management facilitates elimination of redundancy at place of work and enhances efficient sharing of information across the organization. Finally a good MIS is one that is able to support a business Five Year Plan, provide feedbacks, recruitments and training. It must also indicate how things are going and why they are not going well as planned.