A management information system (MIS) is a way of gathering information related to the management aspect and appropriately using that information to make decisions to achieve the goals. This acts as a tool for decision-making and helps to make various crucial decisions in the business. This information is not limited to monetary terms but carries various details related to non-monetary terms as well. As we know, that management plays a huge role in the organization, and a minor fault in the management can adversely affect the firm by making a huge loss by losing its reputation.
Imagine a situation where a manufacturing company that normally produces 10,000 units of an article suddenly drops its production to 8,000 units; how difficult it would be to analyze the cause of this incident. But if there is an MIS, it would be easy for the company to analyze this situation because, as we have read above, this system not only takes monetary terms into account but also considers the non-monetary aspect. This system will give more clarity of the aspect responsible for the reduction in production and will help the company focus more on that aspect and rectify it to get back to their normal production.
Considering the above situation, suppose the reduction is due to a technical problem in the machine that is producing the article. Then it will be an obvious problem that can be worked upon and solved. Now suppose the company has hired 100 laborers to produce the article, and from that 100 laborers, 30 laborers are not working efficiently, leading to a slow production process producing fewer articles.
After going through the above example, the question that arises is how the company will know that the laborers are inefficiently working? A simple answer to this question will be through MIS.
This was just one particular segment we discussed above. Now, if the same case happens with a large manufacturing company, then it would lead to tremendous loss resulting in the shutdown of the business.
That is the reason why large firms usually use the management information system. Even medium to small size firms maintain management information system, but it is on a lower side compared to that of a large organization
Perspectives of MIS
Table of Contents
The MIS includes the following perspectives:
Financial
It includes all the financial terms or monetary activities such as cost and revenue, income from investment, stocks, share prices, cash from the day-to-day operation, etc.
Customer
It includes all customer-related aspects such as customer satisfaction, customer queries, feedback, changes in their taste or preference, etc.
Internal Process
It includes the quality of the product or services, time taken to produce or provide services, convenience, etc.
Learning and Growth
It includes the employee’s satisfaction, absenteeism of employees, capabilities, etc. It uses a benchmark for comparing with the competitors and also includes the external environment.
Characteristics of MIS
Growth
The MIS serves as a base for improvement in the firm. As it includes information about both monetary and non-monetary and focuses as well as internal and external aspects. It becomes very clear which area needs improvement, which will lead to the organization’s growth.
Goals
It helps to achieve the organization’s goals as it will show us where we are lacking to achieve our goals and provide a clear idea for improvement. As a result, it will be easy for us to achieve our targeted goals.
Focus
It helps us focus on the key areas that need attention and will ultimately help us grow.
Types of MIS
Operational Level System
This system focuses on or keeps the record of operational activities, that is, day-to-day activities like sales, receipts, payroll, credit sales, etc., and the low-level managers manage this system.
Management Level System
This system focuses on decision making, controlling, administrative activities, etc. the middle-level managers manage this system.
Strategic Level System
As the name suggests, this system focuses on developing a new strategy that is they take into account the external environment and then comparing and policy formulation, etc.
Advantages
- It helps us focus more on the key areas of the business, which will ultimately lead to the company’s growth.
- It provides a base for comparison internally and externally. Internally comparison from one year to another or one department to another and external comparison from one company to another
Disadvantages
- It is a costly procedure as it requires a lot of effort from employees, which makes it an expensive procedure
- It is a very time-consuming process as it requires a lot of people to work upon