Summary of Session 2 and 3
Identify and describe the different levels in a business firm and their
From highest to lowest, the three levels of the organizational hierarchy are senior, middle,
and operational management.
need summary information that quickly informs them about the
overall performance of the firm, such as gross sales revenues, sales by product group
and region, and overall profitability.
need more specific information on the results of specific functional
areas and departments of the firm, such as sales contacts by the sales force, production
statistics for specific factories or product lines, employment levels and costs, and sales
revenues for each month or even each day.
Knowledge workers, such as engineers, scientists, or architects, design products or
services and create new knowledge for the firm.
They may need access to external
scientific databases or internal databases with organizational knowledge.
need transaction-level information, such as the number of parts
in inventory each day or the number of hours logged on Tuesday by each employee.
Production or service workers actually produce the product and deliver the service.
Production workers need access to information from production machines. Service
workers need access to customer records so they can take orders and answer
questions from customers.
Types of information systems include transaction processing at the operational level,
decision-support systems and management information systems at the middle level, and
executive support systems at the senior level.
Explain why environments are important for understanding a business.
Business environments are constantly changing.
New developments in technology, politics,
customer preferences, and regulations happen all the time.
In general, when businesses fail,
it is often because they failed to respond adequately to changes in their environments. A firm
must monitor changes in its environment and share information with key entities in that
environment in order to stay in business.
External business environmental forces include: technology and science; economy,
international change, and politics.
Internal business environmental forces include: customers, suppliers, stockholders,
regulations, and competitors.
How do systems serve the various levels of management in a business?