Business Information Systems. The major in Business Information Systems is concerned with the study of business information and its production, flows and usage within organisations. It encompasses both manual activities and those involving computing and telecommunications.
Business information systems are sets of inter-related procedures using IT infrastructure in a business enterprise to generate and disseminate desired information.
Such systems are designed to support decision making by the people associated with the enterprise in the process of attainment of its objectives.
The business information system gets data and other resources of IT infrastructure as input from the environment and process them to satisfy the information needs of different entities associated with the business enterprise.
There are systems of control over the use of IT resources and the feedback system offers useful clues for increasing the benefits of information systems to business. The business information systems are sub-systems of business system and by themselves serve the function of feedback and control in business system.
Features of Business Information System:
Characteristics & features of business information system are:
1. The business information systems are subject to the dynamics of business environment and need to be flexible enough to absorb the inevitable changes in the information needs of business. They have to be efficient to satisfy the demanding and ‘hard task masters,’ the business managers. Thus, there is need to balance the conflicting objectives in the process of designing business information systems.
2. Business information systems need to be proactive. They should anticipate changes in information needs of users and accordingly adapt themselves to suit their needs. This has become important because of the fact that the managers get involved in the routine activities to the extent that the decision making becomes a matter of imitating what competitors are doing or planning to do, rather than making an informed choice.
3. The purpose of business information system is to cater to the information needs for decision making in business.
4. The business information systems have to be designed keeping in view the availability of financial and human resources to the business enterprise.
5. The cost effectiveness is a matter of prime concern in the development and maintenance of business information systems. Economic justification for investment in IT infrastructure for business information systems is a pre condition for its existence and sustenance.
Key Components of Business Information System:
Information systems can be described by four of their key components which are:
3. Information and its flow
4. Individuals or functions involved.
It is difficult to observe the decision process through we can see and review the results of a decision. Transactions are usually more visible, though many current systems use computer programs, which are not easy to understand, to process transactions. In principle, an observer can see information and its flows. Individuals can be observed too, but it is not always easy to figure out the information processing functions they perform.
A sole proprietorship is a business owned (and usually operated) by one person who is responsible for all of the firms debts.
Features of sole proprietorship
- One main business – owner also acts as manager.
- Owner makes all decisions.
- Owner contributes all the capital.
- Advantages of sole proprietorship
- Simple to form – Little legal barriers – Simple procedures.
- Low start-up costs – Little capital required. This is good for start-ups who might have problems securing loans from banks.
- Retention of all profit – owner keeps all profit.
- Complete control of business – Decisions can be made quickly as there is no need to consult partners.
- Disadvantages of sole proprietorship
- Unlimited liability: Owner is legally liable for all debts incurred by the business.
- Lack of continuity – A sole proprietorship legally dissolves when the owner dies.
- Reliance on one person for all resources – both finance and human resources.
- Limited credit availability: Banks prefer to lend money to large corporations with stronger financial background.
- General partnership is a business with two or more owners who share in the operation of the firm and in financial responsibility for the firm’s debts.
- Limited partnership is a type of partnership that allows for two types of partners: limited partners and active partners (general partners).
- General partners: Responsible for running the business and are legally liable of all of its debts. All partnerships are required by the Partnership Ordinance to have at least one general partner, mostly for liability purpose.
- Limited partners: Contribute only money or capital to a partnership. Their liability is only limited to the amount of their investment in partnership. They share in the profit but they do not take part in management.
Features of partnership
At least 2 or more partners but not more than 20 partners.
All general partners are expected to play an active role in management.
Partners write and sign partnership agreement – Specifies the role of each partner in the operation of the business.
Advantages of partnership
Larger money pool: banks and other lending institutions prefer to make loans to enterprises that are not dependent on a single individual.
Large talent pool: “Two heads are better than one”.
Ease of formation: It is simple to organize a partnership with few legal requirements.
Disadvantages of partnership
Unlimited liability: each general partner is legally liable for all of the business debts.
Possibility of conflicts: Arguments between partners could be disastrous to the business.
Lack of continuity: When one partner dies or pulls out, a partnership may dissolve legally, even if the other partners agree to stay. If they wish, the surviving partners can quickly form a new partnership to retain the business of the old firm.
Ownership transfer difficult: No partner may sell out without the other partners’ consent.
A business considered by the Companies Ordinance to be a legal entity separate from its owners and with many of the legal rights and privileges of a person; a form of business organization in which owners liability is limited to their investment in the firm.
Features of corporations
As a legal entity, a corporation can own assets, enter into contracts, sue and be sued.
Corporation has many owners – shareholders.
Can be privately held (private companies) or publicly held (listed companies).
Private companies: a business whose stock or share is held by a small group of individuals and is not usually available for sale to the general public.
Listed companies: a business whose stock is widely held and available of sale to the general public through the stock exchange market.
Advantages of corporations
Limited liability: Liability of investors is limited to their personal investments in the company.
Continuity: Corporation has legal life of its founder, continuing after original owners are gone.
Professional management: the executive officers of a corporation are chosen on the basis of their managerial and decision-making skills.
Easy access to source of finance. Bankers are more likely to lend money to large corporations.
Disadvantages of corporation
Cost and complexity of incorporation: Formation procedures more complicated than the other two types; advice from lawyer and accountant often required.
Public disclosure: Government and the Stock Exchange of Hong Kong requires all listed corporations disclose a broad set of financial data to protect investors from misinterpretations of facts. For the firm this may be disadvantageous as it alerts competitors to the firm’s financial weaknesses.
SME (Small & Medium Enterprises) in Hong Kong
Enterprises that engage less than 100 persons in the manufacturing sector and less than 50 persons in the other sectors are classified as SME
- Organizations that help SME:
- Trade Development Council
- Hong Kong Productivity Council
- Hong Kong Chamber of Small & Medium Business
Importance of small business
- Create new jobs.
- Responsible for many investments and innovations.
- Act as supplier or seller of goods and services for larger business.
- Popular forms of small business
- Service Businesses.
- Retail Businesses.
- Wholesale Businesses.
- Manufacturing Businesses.
- Trading Businesses.
- Advantages of small business
- You are the boss that enjoy taking risks and making decisions.
- Great potential rewards.
- Innovative products and services.
- Disadvantages of small business
- Limitation of capital.
- High risk of failure.
Success and Failure of Small Business
- Reasons for success
- Hard working and dedication.
- Demand for the products or services being provided.
- Managerial competence.
- Entrepreneurial characteristics.
- Reasons for failure
- Economic factors.
- Lack of economies of scale.
- Managerial incompetence or inexperience.
- Weak control system.
- Lack of capital.
Starting and Operating the Small Business
- Starting the small business
- Start buying out an existing business.
- Starting from scratch.
- Financing the small business
- Personal funds and funds borrowed from family and friends.
- Bank loans.
- Venture capital firms.
- Sources of management advice
- Board of directors.
- Management consultants.
Franchising is an arrangement in which a buyer (the franchisee) purchase the right to sell the good or services of the seller (the franchiser).
- Advantages of franchising
- To Franchisers:
- Enable the franchiser to grow rapidly by using other people’s (the franchisees’) money.
Franchising combines the benefits of owning a small business with the management skills available from a big business; not having to start the business from scratch.
- Proven methods.
- Established reputation.
- Financial support.
- Reduced risk.
- Disadvantages of franchising
- Lack of independence.
- Continued obligation.
- Lack of individual identity.
- Difficulty in severing ties.
- Risk of Chain’s collapsing.