New information systems quite often play a major role in the support of planning objectives of an organisation. Management participation is required for better evaluation and control of new systems.

(a) Identify and explain three forms of competitive strategies which information technology would address. (9 marks)
(b) Name three tangible and intangible benefits associated with new information systems. (6 marks)
(c) List five ethical and societal dimensions to the development and use of information technology.



a) Competitive strategy
This refers to a strategy, which enables an organization to gain a competitive advantage.
Competitive strategies that would be addressed by information technology:

  • Differentiation strategy
    This strategy aims at producing goods and services, which distinguish an organization from its competitors in terms of quality. Design software could be used to produce unique products that distinguish and organization.
  • Cost leadership/low cost production
    This strategy aims at minimizing production costs so as to maximize profit. Low cost production could be achieved through sound managerial decisions, which are supported by software systems such as decision support systems or expert systems.
  • Forming alliances
    Alliances are aimed at making an organization stronger amongst its competitors.
    Information technology could sustain and alliance through fostering effective communication via communication hardware and software.
  • Growth strategy/ Globalisation
    This strategy aims at tapping foreign markets. Information technology has enabled globalisation via the Internet. Companies can now offer their products and services to a distant clientele via e-commerce sites.
  • Lock-in strategy
    This strategy aims at having a firm grasp of the customers of an organization thus making it difficult for them to switch to competitors. IT applications could be used to lock-in customers by introducing switching costs (e.g. costs of changing telecommunication links, cost of changing hardware and software)

b) Tangible benefits can be quantified. These include:

  • Increased productivity.
  • Lower operational costs.
  • Reduced workforce.
  • Lower computer expenses.
  • Lower outside vendor costs.
  • Lower clerical and professional costs.
  • Reduced rate of growth in expenses.
  • Reduced facility costs.

Intangible benefits are difficult to quantify. These include:

  • Improved asset utilization.
  • Improved resource control.
  • Improved organizational planning.
  • Improved organizational flexibility.
  • More timely information.
  • Increased organizational learning.
  • Legal requirements attained.
  • Enhances employee goodwill.
  • Increased job satisfaction.
  • Improved decision making.
  • Improved operations.
  • Higher client satisfaction.
  • Better corporate image.
  • More information.

c) Ethical and societal dimensions to the development and use of information technology:

  • Information rights and obligations: What information rights do individuals and organizations possess with respect to information about themselves? What can they protect?
  • Property rights: How will traditional intellectual property rights be protected in a digital society in which tracing and accounting for ownership is difficult, and ignoring such property rights is so easy?
  • Accountability and control: Who can and will be held accountable and liable for the harm done to individual and collective information and property rights?
  • System quality: What standards of data and system quality should we demand to protect individual rights and the safety of society?
  • Quality of life: What values should be preserved in an information system and knowledge-based society? What institutions should we protect from violation? What cultural values and practices are supported by the new information technology?


Tactical management level may require the use of Decision Support Systems (DSS) for semi -structured decisions and data modelling.


(a) Describe four functional characteristics of Decision Support Systems (DSS). (8 marks)
(b) Name four types of accounting information systems which DSS may address. (4 marks)
(c)  Explain the term “prototype” and describe the main steps involved in its development. (8 marks)

(Total: 20 marks)


a) Decision Support System (DSS)
This refers to an information system that supports managers in day-to-day decision-making, particularly in semi-structured problem solving. DSSs emphasize on small simple models, which can easily be understood and used by managers, rather than complex integrated systems that need information specialists to operate.

Functional characteristics:

  • They provide analytical capabilities. DSSs are built explicitly with a variety of models to analyse data, or they can condense large amounts of data into a form, which can be analysed by decision makers.
  • They present information in simple graphical form and they may also include tabular representation.
  • They combine both internal and external information to support decision-making.
    External information for a DSS such as a voyage estimating system could include port rates, fuel costs, and port distances. Internal information could include freight rates for various types of cargo, labour costs, fuel and water consumption, etc
  • The DSS only provides support to decision making by providing timely information. It doesn‘t, however, perform decision-making.
  • They are suited for semi-structured problems e.g. a voyage estimating system could answer the question: Given a customer delivery schedule and an offered freight rate, which vessel would be assigned and at what rate in order to maximize profits?
  • They are developed with the participation and often, by individual managers or a group of managers to support a range of decisions of concern to them.
  • They‘re common where effective problem solving is enhanced by interaction between computer and manager.

b) Types of accounting information systems which DSS may address:

  • Budgeting systems.
  • Cash management systems.
  • Capital budgeting systems.
  • Investment management systems.
  • Financial condition analysis systems.

c) Prototype
This refers to a preliminary working version of an information system for demonstration and evaluation purposes. Steps in prototype development:

  • Identification of user requirements
    The system designer (Usually an information systems specialist) works with the user only long enough to capture his or her basic information needs.
  • Development of an initial prototype
    The systems designer creates a working prototype quickly, using fort-generation software, interactive multimedia or computer aided software engineering (CASE).
  • Use of the prototype
    The user is encouraged to work with the system in order to determine how well the prototype meets his or her needs and to make suggestions for improving the prototype.
  • Revise and enhance the prototype
    The system builder notes all the changes the user requests and refines the prototype accordingly. After the prototype has been revised, the cycle returns to (3). (3) And (4) are repeated until the user is satisfied.

When no more iterations are required, the approved prototype then becomes an operational prototype for the application. Sometimes the prototype itself is adopted as the production version of the system.

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