Chapter 13 Enhancing Decision Making for the Digital Firm 13-1

Chapter 13
Enhancing Decision Making for the Digital Firm

True-False Questions
1. Senior management is concerned with general yet timely information on changes in the
industry and society at large that may affect both the long-term and near-term future of the
firm.
Reference: pp. 460-461

2. Middle management is concerned with specific, timely information about firm performance,
including revenue and cost reduction targets.
Reference: p. 461

3. Unstructured decisions are novel and nonroutine, and there is no well-understood or agreed-
on procedure for making them.
Reference: p. 461

4. Unstructured decision making is most prevalent at lower organizational levels.

Reference: p. 461

5. Middle management tend to face more structured decision scenarios, and rarely include
unstructured components.
Reference: p. 461

6. Most decisions would probably fall somewhere between structured and nonstructured.
Reference: p. 461

7. A structured decision involves processing a certain kind of information in a specified way so

that you will always get the right answer. No “feel” or intuition would be necessary.
Reference: p. 461

8. Rank-and-file employees tend to make more structured decisions.

Reference: p. 461

9. Project teams typically deal with structured decisions.

Reference: p. 462

10. The intelligence phase of decision making finds or recognizes a problem, need, or
opportunity.
Reference: p. 462

11. The choice phase of decision making considers ways to solve problems, fill needs, or take
advantage of opportunities.
Reference: p. 462
 13-2 Enhancing Decision Making for the Digital Firm Chapter 13

12. Management information systems provide routine reports and summaries of transactions-
level data to middle and operational-level managers to provide answers to structured and
semistructured decision problems.
Reference: p. 462

13. Executive support systems are targeted systems that combine analytical models with
operational data and supportive interactive queries and analysis.
Reference: p. 462

14. The first stage in Simon's decision-making process model is the choice stage.
Reference: p. 462

15. The design phase of Simon’s decision-making process involves identifying and exploring
various solutions to the problem.
Reference: p. 462

16. In the real world, Simon’s decision-making phases would follow a linear path.
Reference: p. 463

17. MIS typically produce fixed, regularly scheduled reports based on data extracted and
summarized from the firm’s underlying transaction processing systems.
Reference: p. 465

18. DSS primarily address structured problems.

Reference: p. 466

19. The earliest DSS were not model-driven.

Reference: p. 466

20. With query-oriented data analysis, users need to know what they’re looking for.
Reference: p. 466

21. Data mining does not use fuzzy logic.

Reference: p. 467

22. Forecasting models cannot be used to predict the actions of competitors.

Reference: p. 470

23. What-if analysis works forward from known or assumed conditions.

Reference: p. 470

24. Backward sensitivity analysis software is used for goal seeking.

Reference: p. 470

25. The user interface for a DSS must be relatively intuitive, because it may be used by managers
or employees with no patience to learn a complex tool.
Reference: p. 470

26. Predictive analysis uses data-mining techniques, historical data, and assumptions about
future conditions to predict outcomes of events.
Reference: p. 472
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-3

27. Data visualization technologies can make it more difficult for users to understand the data
from information systems.
Reference: p. 473

28. A geographic information system is a decision support system designed specifically to work
with spatial information.
Reference: p. 473

29. DSS are a special category of GIS.

Reference: p. 473

30. Web-based tools for videoconferencing and electronic meetings are the primary tools for
GDSS.
Reference: p. 476

31. During a GDSS electronic meeting, the attendees control the use of GDSS tools.
Reference: p. 477

32. GDSS outcomes are always better than face-to-face meetings.

Reference: p. 478

33. Integrating data from systems designed for very different purposes is a challenge of building
ESS.
Reference: p. 479

34. Contemporary ESS do not need tools for modeling and analysis.
Reference: p. 479

35. Contemporary ESS need to have some facility for environmental scanning.
Reference: p. 479

36. An advantage of ESS is the ability to identify opportunities early on.

Reference: p. 480

37. Balanced scorecard systems show how well the firm is meeting its strategic goals.
Reference: p. 481

38. Enterprise reporting capabilities create measures of firm performance that were not
previously available.
Reference: p. 482

39. The use of critical success factors and other information requirements determination methods
does not always help establish information requirements for ESS and DSS serving senior
management.
Reference: p. 483

40. The business value of DSS and ESS does not depend on changing patterns of management
decision making.
Reference: p. 483
13-4 Enhancing Decision Making for the Digital Firm Chapter 13
Chapter 13 Enhancing Decision Making for the Digital Firm 13-5

Multiple-Choice Questions
 13-6 Enhancing Decision Making for the Digital Firm Chapter 13

41. Applications and technologies that work with data from many different sources to help
users make better business decisions are referred to as:

a.data libraries.
b.enterprise reporting.
c.operational planning.
d.business intelligence.
Reference:p. 458

42. Allocating resources, developing short-range plans, and monitoring the performance of
departments is the concern of this level of management:

a.senior
b.middle
c.operational
d.knowledge
Reference:p. 461

43. This management level is in charge of specific projects and allocate resources within the
project budget:

a.senior.
b.middle.
c.operational.
d.knowledge.
Reference:p. 461

44. Where there is no well-understood or agreed-on procedure for making a decision, it is

said to be:

a.roundabout.
b.unstructured.
c.structured.
d.semistructured.
Reference:p. 461

45. Decision makers can follow a definite procedure for making a decision, it is said to be
a(n):

a.structured decision.
b.unstructured decision.
c.semistructured decision.
d.obscure decision.
Reference:p. 461
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-7

46. These types of decisions are more prevalent at lower organizational levels:

a.indirect decisions.
b.unstructured decisions.
c.structured decisions.
d.semistructured decisions.
Reference:p. 461

47. These types of decisions are most common at higher levels of management:

a.disguised decisions.
b.unstructured decisions.
c.structured decisions.
d.semistructured decisions.
Reference:p. 461

48. Rank-and-file employees tend to make more of these types of decisions:

a.semistructured
b.unstructured
c.structured
d.disguised
Reference:p. 462

49. Which phase of decision making finds or recognizes a problem, need, or

opportunity?
a. Design
b.Intelligence
c.Choice
d.Implementation
Reference:p. 462

50. Which type of decision is calculating gross pay for hourly workers?

a.Structured decision
b.Nonstructured decision
c.Recurring decision
d.Nonrecurring decision
Reference:p. 462

51. Which type of decision is deciding whether to introduce a new product line?

a.Structured decision.
b.Nonstructured decision.
c.Recurring decision.
d.Nonrecurring decision.
Reference:p. 462
 13-8 Enhancing Decision Making for the Digital Firm Chapter 13

52. MIS typically produce:

a.new ways of looking at data that emphasize change, flexibility, and rapid response.
b.fixed, regularly scheduled reports based on data extracted from the organization’s TPS.
c.solutions to semistructured problems appropriate for middle management decision-
making.
d.assumptions, responses to ad hoc queries, and graphic representations of existing data.
Reference:p. 462

53. DSS are intended to help design and evaluate alternatives and:

a.monitor the adoption or implementation process.

b.provide reports through an intranet.
c.provide information to business partners.
d.monitor and forecast the business decisions taken by senior managers.
Reference:p. 462

54. Simon’s description of decision-making consists of four stages:

a.planning, financing, implementation, and maintenance.

b.planning, design, implementation, and maintenance.
c.intelligence, design, choice, and implementation.
d.intelligence, design, financing, and implementation.
Reference:p. 462

55. Simon’s description of decision-making consists of four stages. This stage consists of
discovering, identifying, and understanding the problem:

a.intelligence.
b.design.
c.choice.
d.implementation.
Reference:p. 462

56. This application typically produces fixed, regularly scheduled reports based on data
extracted and summarized from the organization’s TPS:

a.MIS.
b.DSS.
c.ESS.
d.GDSS.
Reference:p. 465
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-9

57. These systems are intended to help design and evaluate alternatives and monitor the
adoption or implementation process:

a.GPS
b.ESS
c.TPS
d.DSS
Reference:p. 465

58. Model-driven DSS::

a.analyze large pools of data.

b.are primarily standalone systems.
c.use multidimensional analysis.
d.mine Web site data.
Reference:p. 466

59. ___________________ provides insights into corporate data that cannot be obtained
with OLAP by finding hidden patterns and rules used to guide decision making and
forecast the effect of those decisions.

a.Association
b.Sequencing
c.Profitability analysis
d. Data mining
Reference:p. 466

60. In data mining, occurrences linked to a single event are called:

a.associations.
b.sequences.
c.classifications
d.clusters.
Reference:p. 467

61. _________________ helps managers estimate the future value of continuous variables
such as sales figures.

a.Sequencing
b.Association
c.Profitability analysis
d.Forecasting
Reference:p. 467
 13-10 Enhancing Decision Making for the Digital Firm Chapter 13

62. Optimization models often use:

a.data co-integration.
b.linear programming.
c.abstract decision processing.
d.model data libraries.
Reference:p. 469

63. The components of the DSS are the:

a.internal database, external database, and analysis tools.

b.data visualization tools, software, and graphics capabilities.
c.database, graphics capabilities, and analysis tools.
d.database, software system, and user interface.
Reference:p. 469

64. A model that asks what-if questions repeatedly to determine the impact on outcomes of
changes in one or more factors is called a(n):

a.optimization model.
b.sensitivity analysis model.
c.goal seeking model.
d.slice and dice model.
Reference:p. 470

65. Backward sensitivity analysis software is used for:

a.sequencing.
b.what-if.
c.goal seeking.
d.slice and dice.
Reference:p. 470

66. Discount chain ShopKo Stores uses this type of software to determine the optimal time
and price for marking down items:

a.optimization.
b.goal seeking.
c.what-if
d.sensitivity.
Reference:p. 471

67. A model that uses data-mining techniques, historical data, and assumptions about future
conditions to predict outcomes of events is known as:

a.optimization analysis.
b.sensitivity analysis.
c.predictive analysis.
d.goal seeking analysis.
Reference:p. 472
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-11

68. This information system uses data visualization technology to analyze and display data
for planning and decision making in the form of digitized maps:

a.GIS.
b.DSS.
c.MIS.
d.TPS.
Reference:p. 473

69. Electronic questionnaires in a GDSS:

a.facilitate the organized integration and synthesis of ideas generated during

brainstorming.
b.document group agreement on definitions of words and terms central to the projects.
c.use structured approaches to evaluate the impact of an emerging proposal on the
organization.
d.aid the organizers in premeeting planning by identifying issues of concern.
Reference:p. 477

70. Idea organizers in a GDSS:

a.facilitate the organized integration and synthesis of ideas generated during

brainstorming.
b.document group agreement on definitions of words and terms central to the projects.
c.use structured approaches to evaluate the impact of an emerging proposal on the
organization.
d.aid the organizers in premeeting planning by identifying issues of concern.
Reference:p. 477

71. Tools for voting or setting priorities in a GDSS:

a.facilitate the organized integration and synthesis of ideas generated during

brainstorming.
b.document group agreement on definitions of words and terms central to the projects.
c.use structured approaches to evaluate the impact of an emerging proposal on the
organization.
d.make available a range of methods for setting priorities.
Reference:p. 477

72. Policy formation tools in a GDSS:

a.facilitate the organized integration and synthesis of ideas generated during

brainstorming.
b.provide structured support for developing agreement on the wording of guideline
statements.
c.use structured approaches to evaluate the impact of an emerging proposal on the
organization.
d.aid the organizers in premeeting planning by identifying issues of concern.
Reference:p. 477
 13-12 Enhancing Decision Making for the Digital Firm Chapter 13

73. Stakeholder identification and analysis tools in a GDSS:

a.facilitate the organized integration and synthesis of ideas generated during

brainstorming.
b.document group agreement on definitions of words and terms central to the projects.
c.use structured approaches to evaluate the impact of an emerging proposal on the
organization.
d.aid the organizers in premeeting planning by identifying issues of concern.
Reference:p. 477

74. In an electronic meeting system, group interaction includes:

a.session planning, organizational memory, personal productivity, and enterprise

analysis.
b.idea generation, complex problems, and large groups.
c.idea generation, idea organization, prioritizing, and policy development.
d.session planning, prioritizing, policy development and organizational memory.
Reference:p. 478

75. GDSS are most useful for tasks involving:

a.session planning, organizational memory, personal productivity, and enterprise

analysis.
b.idea generation, complex problems, and large groups.
c.idea generation, idea organization, prioritizing, and policy development.
d.session planning, prioritizing, policy development, and organizational memory.
Reference:p. 479

76. A problem common to paper reports is:

a.data overload.
b.spotting problems.
c.data manipulation.
d.their inability to monitor organizational performance.
Reference:p. 479

77. Executives need a wide range of __________________ as well as internal data.

a.executive support systems

b.training in using ESS
c.system functionality
d.external
Reference:p. 479
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-13

78. The easy use of graphics in an ESS allows the user to:

a.look at more data in less time with greater clarity.

b.use creative analysis.
c.examine other managers’ work without their knowledge.
d.decentralize decision making.
Reference:p. 480

79. The traditional measurement of value for companies includes financial metrics such as:

a.double-entry bookkeeping.
b.ING metrics analysis.
c.balanced scorecards.
d.return on investment.
Reference:p. 481

80. Even if a problem can be addressed by an information system, senior management:

a.may not be able to use one.

b.may not have a complete data warehouse.
c.may not be able to read the reports generated.
d.may not fully understand its actual information needs.
Reference:p. 483

Fill In the Blanks

 13-14 Enhancing Decision Making for the Digital Firm Chapter 13

81. The term business intelligence refers to applications and technologies that work with data
from many different sources to help users make better business decisions.

Difficulty: Easy Reference: p. 458

82. A(n) structured decision is repetitive and routine, for which known algorithms provide
solutions.

Difficulty: Easy Reference: p. 461

83. A(n) unstructured decision is novel and nonroutine.

Difficulty: Easy Reference: p. 461

84. Simon’s description of decision making consists of four stages: intelligence, design, choice,
and implementation.

Difficulty: Easy Reference: pp. 462-463

85. An MIS typically produces fixed, regularly scheduled reports based on data from the
company’s transaction processing system.

Difficulty: Hard Reference: p. 465

86. A(n) model-driven DSS is primarily a stand-alone system using some type of pattern to
perform “what-if” and other kinds of analyses.

Difficulty: Easy Reference: p. 466

87. A(n) data-driven DSS supports decision making by allowing users to extract and analyze
useful information previously buried in large groupings.

Difficulty: Easy Reference: p. 466

88. Data mining is more discovery driven than traditional database queries.

Difficulty: Medium Reference: p. 466

89. Associations are occurrences linked to a single event.

Difficulty: Medium Reference: p. 467

90. Sequences are events linked over time.

Difficulty: Medium Reference: p. 467

91. Classification recognizes patterns describing the group to which an item belongs by
examining existing items that have been classified and by inferring a set of rules.

Difficulty: Medium Reference: p. 467

 Chapter 13 Enhancing Decision Making for the Digital Firm 13-15

92. Clustering discovers different groupings within data, such as finding affinity groups for bank
cards or partitioning a database into groups of customers based on demographics and types of
personal investments.

Difficulty: Medium Reference: p. 467

93. Knowledge discovery is the process of identifying novel and valuable patterns in large
volumes of data.

Difficulty: Medium Reference: p. 467

94. Forecasting uses a series of existing values to predict what other values will be.

Difficulty: Medium Reference: p. 469

95. In a DSS, the DSS database is a collection of current or historical data from a number of
applications or groups.

Difficulty: Easy Reference: p. 469

96. In a DSS, the DSS software system is a collection of software tools used for data analysis.

Difficulty: Easy Reference: p. 469

97. A(n) model is an abstract representation illustrating the components or relationships of a

phenomenon.

Difficulty: Easy Reference: p. 469

98. A(n) optimization model determines the best resource allocation to maximize or minimize
specified variables.

Difficulty: Medium Reference: p. 469

99. A(n) sensitivity analysis is a model that asks “what-if” questions repeatedly, changing
certain values each time.

Difficulty: Medium Reference: p. 470

100. A(n) what-if analysis works forward from known or assumed conditions to test the impact
on outcomes of changes in the values of specified variables.

Difficulty: Medium Reference: p. 470

101. A(n) backward sensitivity analysis is used for goal seeking.

Difficulty: Hard Reference: p. 470

102. Parkway Corporation’s asset utilization system is an example of a data-driven DSS.

Difficulty: Hard Reference: p. 472

 13-16 Enhancing Decision Making for the Digital Firm Chapter 13

103. Predictive analysis uses data-mining techniques, historical data, and assumptions about
future conditions to predict outcomes of events.

Difficulty: Medium Reference: p. 472

104. Data visualization helps users see patterns and relationships in large amounts of data by
presenting the data in graphical form.

Difficulty: Medium Reference: p. 473

105. A(n) geographic information system (GIS) analyzes and displays data using digitized maps
to enhance planning and decision making.

Difficulty: Easy Reference: p. 473

106. Web-based DSS have become very popular in the financial services area because so many
people are trying to manage their own assets and savings.

Difficulty: Medium Reference: p. 473

107. A(n) customer decision-support system (CDSS) supports the decision-making processes of
an existing or potential customer.

Difficulty: Easy Reference: p. 474

108. A(n) customer decision-support system (CDSS) helps the customer decide what products to
buy.

Difficulty: Easy Reference: p. 474

109. A(n) group decision-support system (GDSS) facilitates the solution to unstructured problems
by a set of decision-makers working together as a group.

Difficulty: Easy Reference: p. 476

110. A(n) group decision-support system (GDSS) is an interactive computer-based system to

facilitate the solution to unstructured problems by a set of decision makers working together
as a group.

Difficulty: Easy Reference: p. 477

111. In a collaboration laboratory, individuals work on their own desktop PCs or workstations.

Difficulty: Medium Reference: p. 477

112. A(n) facilitator controls the use of the GDSS tools during an electronic meeting, but each
attendee controls his/her own screen.

Difficulty: Easy Reference: p. 477

 Chapter 13 Enhancing Decision Making for the Digital Firm 13-17

113. Drilling down is the ability to move from summary data to lower and lower levels of detail.

Difficulty: Easy Reference: p. 479

114. Contemporary ESS include tools for modeling and analysis.

Difficulty: Easy Reference: p. 479

115. In an ESS, the easy use of graphics allows the user to look at more data in less time with
greater clarity than paper-based systems provide.

Difficulty: Easy Reference: p. 480

116. The most visible benefit of ESS is their ability to analyze trends.

Difficulty: Medium Reference: p. 480

117. Digital dashboards use easy-to-understand displays to provide management with a

comprehensive view of firm performance on a single screen.

Difficulty: Hard Reference: p. 481

118. A(n) balanced scorecard is a model for analyzing firm performance that supplements
traditional financial measures with measurements from additional business perspectives.

Difficulty: Easy Reference: p. 481

119. Activity-based costing is a model for identifying all the company processes that cause
expenses to occur while producing a specific product or service.

Difficulty: Hard Reference: p. 482

120. Activity-based costing is a model for identifying unprofitable products and services.

Difficulty: Medium Reference: p. 482

Essay Questions
 13-18 Enhancing Decision Making for the Digital Firm Chapter 13

121. Your text states that many t managers use the new capabilities in DSS and ESS to obtain the
same information as before the new systems were implemented. . How would you induce a
traditional manager to use new DSS and ESS more effectively?

Managers must be trained to ask better questions of the data. This will require major changes
in traditional management thinking. Perhaps one way to induce a traditional manager to be
more interested in these systems would be a dog-and-pony show at a senior-level
management retreat. Of course, the introduction into mid-level management of people trained
in the use of these systems could also act as a spur.

122. Describe the two types of DSS. Explain circumstances in which one might be used. Give an
example of the use of each system.

Model-driven DSS were primarily stand-alone systems isolated from major organizational
information systems that used some type of model to perform “what-if” and other types of
analyses. Their analysis capabilities were based on a strong theory or model combined with a
good user interface to make the model easy to use. There are several examples in the
textbook: the voyage-estimating DSS described in chapter 2, the Gaps planning and
forecasting system described at the beginning of this chapter, and Continental Airlines
system for cargo revenue optimization are mentioned on page 350.

The second type of DSS is a data-driven DSS. These systems analyze large pools of data
found in major organizational systems. They support decision making by allowing users to
extract useful information that was previously buried in large quantities of data. Often data
from transaction processing systems are collected in data warehouses for this purpose.
OLAP and data mining can then be used to analyze the data. WH Smith PLC’s system for
online sales and profitability analysis described in the Window on Organizations, p. 352, is
an example of a data-driven DSS.
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-19

123. Describe/Define at least four types of information that datamining can yield. Give an
example of each one.

There are five types of information discussed in the text:

•Associations – are occurrences linked to a single event. Example: A study of
supermarket purchasing patterns might reveal that when corn chips are
purchased, a cola drink is purchased 65 percent of the time, but when there is
a promotion, cola is purchased 85 percent of the time.
•Sequences – events are linked over time. Example: If a house is purchased, a
new refrigerator will be purchased within two weeks 65 percent of the time,
and an oven will be bought within one month of the home purchase 45
percent of the time.
•Classifications – recognizes patterns that describe the group to which an item
belongs by examining existing items that have been classified and by
inferring a set of rules. Example: Businesses such as credit card or
telephone companies worry about the loss of steady customers.
Classification can help discover the characteristics of customers who are
likely to leave and can provide a model to help managers predict who they
are so that they can devise special campaigns to retain such customers.
•Clusters – working in a manner similar to classification when no groups have
yet been defined. Example: A data-mining tool can discover different
groupings within data, such as finding affinity groups for bank cards or
partitioning a database into groups of customers based on demographics and
types of personal investments.
•Forecasts – uses a series of existing values to forecast what other values will be.
Example: Forecasting might find patterns in data to help managers estimate
the future value of continuous variables such as sales figures.

124. Discuss the four types of models commonly found in model libraries.

Statistical modeling software can be used to help establish relationships, such as relating
product sales to differences in age, income, or other factors between communities.
Optimization models, often using linear programming, determined optimal resource
allocation to maximize or minimize specified variables such as cost or time. A classic use of
optimization models is to determine the proper mix of products within a given market to
maximize profits. Forecasting models are often used to forecast sales. The user of this type
of model might supply a range of historical data to project future conditions and the sales that
might result from those conditions. Companies often use this software to predict the actions
of competitors. Sensitivity analysis models ask “what-if” questions repeatedly to determine
the impact of changes in one or more factors on outcomes.

125. How specifically does the digital firm use DSS? Discuss each use, giving examples.

DSS can help companies improve supply chain management and customer relationship
management. Some take advantage of the company-wide data provided by enterprise
systems. DSS today can also harness the interactive capabilities of the Web to provide
decision-support tools to both employees and customers.
 13-20 Enhancing Decision Making for the Digital Firm Chapter 13

126. List and describe at least three ways in which GIS can be used by modern business.

Geographic information systems are a special category of DSS that use data visualization
technology to analyze and display data for planning and decision-making in the form of
digitized maps. GIS can best be used to support decisions that require knowledge about the
geographic distribution of people or other resources in scientific research, resource
management, and development planning. GIS have modeling capabilities, allowing managers
to change data and automatically revise business scenarios to find better solutions. For
instance, a company could display its customers on a map and then design the most efficient
delivery route for its products. A second way in which it could be used would be to analyze
demographic information to decide where to open branch restaurants. A third use could be
customer demographic data and map information to locate people who are likely to become
customers for the company’s services.

127. Describe and explain how a GDSS works to enhance group decision making. What are at
least four factors involved in the successful outcome of any group meeting?

Beyond three to five attendees the traditional meeting process breaks down. GDSS software
tools contribute to a more collaborative atmosphere by guaranteeing contributors’ anonymity
so that attendees can focus on evaluating the ideas themselves. The GDSS software tools
follow structured methods for organizing and evaluating ideas and for preserving the results
of meetings, allowing non-attendees to locate needed information after the meeting. The
documentation of the meeting by one group at one site can also be used as input to another
meeting on the same project at another site. If properly designed and supported, GDSS
meetings can increase the number of ideas generated and the quality of decisions while
producing the desired results in fewer meetings.

The nature of electronic meeting technology is only one of a number of factors that affect
meeting processes and output. The outcome of group meetings depends upon the
composition of the group, the manner in which the problem is presented to the group, the
facilitator’s effectiveness, the organization’s culture and environment, the quality of the
planning, the cooperation of the attendees, and the appropriateness of tools selected for
different types of meetings and decision problems.
 Chapter 13 Enhancing Decision Making for the Digital Firm 13-21

128. List at least three factors to consider when planning an ESS.

A major challenge of building executive support systems has been to integrate data from
systems designed for very different purposes so that senior executives can review
organizational performance from a firm-wide perspective.

ESS must be designed so that high-level managers and others can use them without much
training.

One area that merits special attention is the determination of executive information
requirements. ESS need to have some facility for environmental scanning. A key information
requirement of managers at the strategic level is the capability to detect signals of problems
in the organizational environment that indicate strategic threats and opportunities. The ESS
need to be designed so that both external and internal sources of information can be used for
environmental scanning purposes.

Implementation of the DSS must be carefully managed to neutralize the opposition of

managers at the lower levels of the organization, because DSS potentially could give top
executives the ability to examine their work without their knowledge.

129. Describe MIS and DSS and differentiate between them.

MIS provide information on the firm’s performance to help managers monitor and control
the business. They typically produce hard copy, fixed, regularly scheduled reports based on
data extracted and summarized from the organization’s underlying transaction processing
systems. DSS provide new sets of capabilities for nonroutine decisions and user control.
MIS accents reports based on routine flows of data and assists in the general control of the
organization. DSS emphasizes change, flexibility, and rapid response to unstructured
problems.

130. What is the balanced scorecard model? Why is it particularly useful? Where does it get its
information?

The balanced scorecard is a model for analyzing firm performance that supplements
traditional financial measures with measurements from additional business perspectives, such
as customers, internal business processes, and learning and growth. Managers can use
balanced scorecard systems to see how well the firm is meeting its strategic goals. Data to fill
out the scorecard, from sources such as financial ledger applications and client retention and
market penetration ratios, feed a central data warehouse. The data is mined and ad hoc
reports can be created.