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Use Of Management Information System As An Aid To Management Decision In Small Scale Firms

(A Study Of Selected Firms In Aba)

5 Chapters
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84 Pages
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10,933 Words

In small-scale firms, the utilization of Management Information Systems (MIS) plays a crucial role in facilitating informed decision-making processes. MIS integrates technology, people, and processes to provide managers with timely, relevant, and accurate information for decision-making. By leveraging MIS, small-scale firms can efficiently collect, process, store, and retrieve data related to various aspects of their operations, including sales, inventory, finances, and human resources. This enables managers to analyze trends, identify opportunities, and pinpoint areas for improvement, thereby enhancing operational efficiency and competitiveness. Additionally, MIS enables real-time monitoring of key performance indicators (KPIs), allowing managers to promptly address issues and capitalize on emerging opportunities. Moreover, MIS facilitates communication and collaboration among different departments within the organization, fostering synergy and alignment towards common goals. By harnessing the power of MIS, small-scale firms can gain a competitive edge in their respective industries, driving sustainable growth and success.

ABSTRACT

A clear understanding of managerial functions is very important for the accountant who must provide the necessary information which managers need to perform their functions. In a modern competitive economy the availability of relevant, timely and accurate information especially for planning controlling pricing and other decisions are the immense concerns to modern managers. Management provides information for decision-making in any organization. Information is very vital and indispensible for the success and survival of any organization. For a company to ensure and established its existence, as a going concern it must aim at a food profitability scheme profit optimization. This can only be achieved through efficient use of management information system. In the course of this research, the researcher discovered some problems which militated against effective and efficient performance of manufacturing firms ranged from the interpretation of data information to decision-making. However, some recommendations were offered as to improving the supply and use of management information system as an aid to small scale manufacturing firm decision.

TABLE OF CONTENT

Title Page
Approval Page
Dedication
Acknowledgments
Abstract
Table of Contents

CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 3
1.3 Purpose of the study 4
1.4 Research questions 5
1.5 Research hypothesis 6
1.6 Significance of the study 7
1.7 Scope of the study 7
1.8 Limitations of the study 8
1.9 Definitions of terms 9
1.10 Organizational profile 10

CHAPTER TWO
2.0 Literature review 14
2.1 Introduction 14
2.2 Roles of management information system to
management 18
2.3 Sources of management information system 21
2.4 The nature and use of management information in
Small scale firms 23
2.5 Management information system and management
Decision process 29
2.6 Cost analysis as a source of information for decision
Making 31
2.7 Problems of the use of management information
System in small scale firms 35
2.8 Researcher’s position 36

CHAPTER THREE
3.0 Research methodology 40
3.1 Sources of data collection 40
3.2 Population and determination of sample size 41
3.3 Method of data collection 42
3.4 Method of data analysis 43

CHAPTER FOUR
4.0 Presentation, analysis and interpretation of data 46
4.1 Introduction 46
4.2 Analysis of results from questionnaires returned 47
4.3 Test of hypothesis 53
4.4 Interpretation of data 64

CHAPTER FIVE
5.0 Summary of findings, Conclusion and
Recommendations 66
5.1 Summary of findings 66
5.2 Conclusion 67
5.3 Recommendations 69
Bibliography 72
Appendices 74-78

 

 

 

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Management is constantly faced with the problem of making alternative decisions due to limitations and scarcity of resources. And do not only see to ascertain cost of various stages in the process of providing product or services but also make proper accurate decision at all levels in the proper utilization of adequate and accurate management information system.
The development of manufacturing firms whether small or large and the activation of their potential depend on the existence of entrepreneurs with the present skills, capital and professional advice, which include accurate management information. Management information is a tool and like most tools cannot be of much help to those who are unable or unwilling to use or who misuse it. Despite the provision of management information system, managers find it difficult to plan accurately, resulting from not achieving the target. This is as a result of inadequate and inappropriate use of information through interpretation of accounts.
One may then ask, why does some manufacturing firms succeed and others fail? The answers are just the adoption of management practices which provides necessary management information system for the survival of any manufacturing firm concerned. That is to say that without good management information system no business venture can survive the test of time. It also implies that management information system guides management in making management decision, aids in measuring performance at all levels of profits, production and control maintenance and setting of standards.
In view of the role of management information as being indispensable in any business organization, this study will examine the use of management information system in manufacturing firms. It will also look at the constraints affecting the use of management information further gives a review of related literature which will discuss the nature and sources of information, the users and importance of management information to the manufacturers.
Research method will be adopted in the study with study of selected firms in Aba, findings properly analyzed with view of making recommendations on findings and suggestion on further study.

1.2 STATEMENT OF PROBLEMS
Business organizations are constantly faced with alternative course of action that are accompanied with risks and uncertainties. As a result of this, there is need for extra management skills on the part of managers if they are to bareness the opportunities that come with such alternatives.
The major use of management information system is minimization of risks and uncertainties that are accompanied bring about failure in business. This could possibly be achieved through proper use of accurate management information system.
The acquisition and lack of proper use of management information system in small scale manufacturing firms have arisen due to some problems. This is as a result of provision of information by unqualified and inexperienced accountants and staff, which are inaccurate and could not meet up the target. On the other hand when the accurate management data’s are made available, managers may not be able to interpret them and some may not be relevant for decision making. These problems are most cases make the firm to deviate from its normal course to attain a stated objective. This study will seek possible solutions to these identifiable problems.

1.3 PURPOSE OF THE STUDY
In this study, the ways which management information can aid small scale manufacturing firms in management decision making process will be examined. It will also re-ray the cause of failure in the attainment of organizational objectives, resulting from lack of adequate utilization of management information system. The limitations in the use of management information system by management will be explained.
The following issues that cause hindrances to the attainment of organizational objectives and the use of management information system in decision making will be addressed:
1. Inadequate management information
2. Inability to interpret account
3. Inadequate managerial expertise
4. Lack of simple and well published management records.
5. Lack of sufficient capital.
Also, the following recommendations at to the ways of improving the use of management information system will be examined.
1. How management data should be utilized for decision making.
2. The need for formal training in the interpretation of management information system is necessary.
3. Employing professional staff at the management level is very important.
4. The use of facilities that aids in the process of data is very important.

1.4 RESEARCH QUESTIONS
Based on the problems of definition and objective of study, the following research questions have been formulated:
1. Does management information system improve management decision making?
2. Does good use of management information system helps in achieving organizational objectives?
3. How relevant are management information system to the management decision making of small firms?
4. Is management decision making of manufacturing firms based on management information system?
5. Does poor interpretation of management information system affect decision making?

1.5 RESEARCH HYPOTHESIS
For empirical validation of study, the following research hypothesis has been formulated:
Ho: Management information system making does not improve management decision making in manufacturing firms.
Hi: Management information system improves management decision making in manufacturing firms.
Ho: Management information system has not been helping the manufacturing firm to achieve its goals and objectives.
Ho: Management information system has been helping the manufacturing firm to achieve its goals and objectives.
Ho: There is no significance relationship between management information system and organization objectives.
Hi: There is significance relationship between management information system and organization objectives.

1.6 SIGNIFICANCE OF THE STUDY
It is a fast that an effective use of management information system is very necessary in management decision making. In view of this, this study will enable management to identify the use of management information system for effective and efficient management of small scale manufacturing firms.
Users of management information system will find this study beneficial and make them appreciate, the importance of quality management information system in the management information system to realize the importance of accurate information and dangers of in accuracy to management, thus improving the quality of their services.
This study will also serve student and researchers of related field who might conduct similar enquires into this topic as a frame of reference.

1.7 SCOPE OF THE STUDY
There are many manufacturing firms in Aba but this study will use three (3) selected firms as a case study. The study will try to find out whether adequate study and accurate management information system is supplied and used by management in decision making. There will also be distribution of questionnaires to these selected firms which will cover few decision making areas as regards planning, control and costing.

1.8 LIMITATIONS OF THE STUDY
It is observed that certain manufacturing firms’ services are for immediate consumption and demand of their products are for local environment. As a result of this, the owners are conservative and suspicious, unwilling to release information about their business for fear of taxation and run wanted competition.
Also people’s attitude towards questionnaire completion and studies of this nature are often considered sensitive and looked upon with suspicious by some personnel.
There are also low level of managerial skill by operators, in adequate marketing information and strategies, low technological base and lack of technical know-how.
Finance is a major constraint since the cost has borne by the researcher. Several trips were made to the companies some of which are located at obscure places etc.

1.9 DEFINITIONS OF TERMS
Management: Management is defined as the combination of material and human resources to achieve goals, according to Mauser and Schwartz (1979:209).
Information: Information is anything capable of affecting the uncertainty associated with a given situation (Hayes, 1976:801).
System: A system is a means of which an organization achieves its goals. It could also be seen as an established or organized procedure or a method.
Organization: An organization is the internal environment where business activities are carried out. It consists of units with a clear out division of labour and expect employed and trained for different business function.
Objectives: Are board and qualitative statement about the organizations performance target. Objectives are integral to plans because they specify future conditions that the planner deems satisfactory.

1.10 ORGANIZATIONAL PROFILE
Anzzy Industrial Company (Ltd.) Aba
The company was incorporated in 1983 and started its full production in 1984 with forty (40) staff. It is located at No. 158 Old Express Road by Semek Junction Faulks Road, Aba, Abia State.
Anzzy Industrial Company (Nig.) Ltd. Is a private limited company with ordinary share capital of 500,000 incorporated to produce shoes, bags, belts and other leather accessories. The raw materials for their production are imported.
The company changes its production to shoe, gums and other shoe accessories in the year 2003. It produces thirty seven thousand (37,000) drums of gum in a week and their staff has increased to one hundred and forty two presently was sectional heads. The company has three (3) branches in the same town. The company’s turnover is about twenty-six million naira (N26.0m) only.
J and J Paints Manufacturing Company Aba
The company was incorporated in 1993 but operation started in 1995 after other formalities. The company is like a private limited company.
It is located at No. 19 Afor Ule Market Avenue, Abayi, Osisioma Ngwa Local Government Area, while its head office is at No. 2 Market Road, Aba. The company is an indigenous company, which implies that there are no foreign partners. All the raw material for operation is locally purchased in the country.
Its turnover is about sixty thousand naira (N60,000) only and produces about fifty thousand brackets of paint in a week. The staff of the firm are few and made up of both skilled and unskilled labourers. The product is locally purchased.
Korama Clover Industrial Ltd Aba
This company is located at Kilometer 6 Old Aba-Owerri Road, Osisioma Local Government Area, Abia State. A medium scale manufacturing firm incorporated in 1980 and started its full operation later after.
Formerly, the company was situated at Port-Harcourt Road in a warehouse before they moved to their permanent site at Osisioma Ngwa Local Government Area.
The company has a section for the production of car paint called Sinclair synthetic car paint and section for the production of plastic or storing the paints. It established depots which serve as outlets for their products at different located in any of the marketing regions.
The company employed more than one hundred (100) workers both skilled, semi-skilled and unskilled.

 

 

 

 

 

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Use Of Management Information System As An Aid To Management Decision In Small Scale Firms:

Management Information Systems (MIS) play a crucial role in aiding management decisions in small-scale firms, just as they do in larger organizations. While the scale and complexity may differ, the fundamental principles and benefits of MIS remain the same. Here are some key ways in which MIS can aid management decision-making in small-scale firms:

Data Organization and Storage: Management Information System helps small firms organize and store vast amounts of data efficiently. This data can include financial records, customer information, inventory levels, and more. Having this information readily accessible is essential for making informed decisions.

Data Analysis: Management Information System software often includes data analysis tools. Small firms can use these tools to identify trends, patterns, and anomalies in their data. For example, they can analyze sales data to understand which products are performing well and which ones need improvement.

Real-time Information: Management Information System systems can provide real-time or near-real-time information. Small firms can use this feature to monitor their operations and react quickly to changing circumstances. For instance, they can track inventory levels and reorder products when supplies are running low.

Financial Management: Management Information System can help with financial management by providing tools for budgeting, expense tracking, and financial forecasting. Small-scale firms can use these features to ensure they are operating within their budget and to plan for future investments or expansions.

Inventory Management: For small-scale firms, efficient inventory management is critical. MIS can track inventory levels, monitor product turnover rates, and generate alerts when items are nearing their expiration date. This ensures that the firm always has the right amount of stock on hand to meet customer demand.

Customer Relationship Management (CRM): Small firms can use MIS to manage customer information and interactions. This can include tracking customer inquiries, purchase history, and preferences. This data can help in tailoring marketing strategies and providing better customer service.

Supply Chain Management: Management Information System can aid in optimizing the supply chain for small-scale firms. It can track the movement of goods, monitor supplier performance, and identify areas where cost savings or efficiency improvements can be made.

Decision Support: Management Information System provides decision support tools that can assist management in scenario planning, “what-if” analysis, and risk assessment. Small firms can use these tools to evaluate different options and make informed decisions.

Reporting: Management Information System systems can generate customized reports that provide a snapshot of the firm’s performance. Small-scale firms can use these reports to assess their financial health, track key performance indicators (KPIs), and communicate progress to stakeholders.

Cost Reduction: Through automation and improved efficiency, MIS can help small firms reduce operational costs. This includes savings in time, labor, and resources.

Competitive Advantage: Small-scale firms can gain a competitive advantage by leveraging Management Information System to make quicker, data-driven decisions. This can lead to better customer service, more efficient operations, and the ability to adapt to market changes rapidly.

In summary, Management Information Systems are valuable tools for small-scale firms as they provide the means to organize data, analyze information, and make informed decisions. In a competitive business environment, having access to timely and accurate data is essential for survival and growth, regardless of a firm’s size.