P1 - explain how organisations use information
Information Use in a Business
Types of Information
There are four main types of information; qualitative, quantitative, primary and secondary. Qualitative information is generally described in words and can often be open questions where the answer can be interpreted, an example would be ‘what do you like about the store?’ Quantitative information is generally numbers, this type of information can be shown in graphs or as statistics directly whereas qualitative will usually have to be changed to create graphs, an example of quantitative data is 72/100 people like pasta bake. Primary information is information you get yourself first hand, it can’t be information you got yourself from someone else, it must all be new information or information you got yourself previously. Secondary information is information which you may have got from a book, online or anywhere which isn’t primary; this image would be an example of secondary information as I did not make it myself and took it from a website.
Purposes of information
Information is used in Tesco to keep the business running smoothly and to keep the customers happy. Information such as stock levels can be used for operational support, Tesco will know when they have to order stock as they will know how little stock they have. Without the information of stock levels then Tesco would have to wait for the stock to run out and then wait a few days without stock while they wait for the order or they would need someone to go around counting the stock all the time.
Information can be used to analyse the business and used to find the areas which need to be improved and see what areas are doing well. They could use information from primary or secondary sources to analyse what products or brands sell best. They could use information from operational support to tell when (time of day) the store sells the most products. They could analyse data in the form of graphs which would turn it into information.
From the analysis decisions can be made, tactical; which are usually changes which will take place quickly and don’t have much planning put into them. Strategic decisions are usually planned for long term and take a while to put into practise. Tactical decisions will be made more often, they could consist of changing stock levels for certain products which are more or less popular. It could also be firing people or recruitment for individual stores. Strategic decisions would be reducing staff across the country to save money or selling stores. These decisions would be made from analysing information. Tesco can also analyse what supermarket is cheapest overall and see where they stand in the big four supermarkets price wise. They can then use the results to try and become cheaper or to put up their prices.
Information can be used to gain a commercial advantage in many ways; they can reduce the price of products which are most popular so people would shop at Tesco as a pose to their rivals. Tesco also uses information for their club card reward service, they will monitor what products each customer buys often and can give them discount vouchers for the products they like. Having discounts will encourage people to go to Tesco and then spend more money once they are in the shop.
Sources of Information & Information flows
· Personnel would manage hiring people and would record the successful applicant’s information into the database for the company. They may produce reports on performance of staff. They can also manage communications so they may set up email services. They would keep track of attendance, hours (timesheets) and manage staffs holidays, they may pass information on days they have had off which they shouldn’t have to finance so they can arrange payment. They can also arrange bonuses to be paid out through finance.
· Marketing would look at information on what sells best or what makes them the most money and aim it at its target audience through adverts. They would communicate with sales or finance to find out what sells the most and/or makes the most profit.
· Sales department would meet the customers in Tesco first hand, they will actually sell the products and operate the tills, information will be recorded from the tills to a database which will record what sells. Sales won’t need to communicate with purchasing in Tesco as a lot of the ordering is done automatically when stock levels get low however information will still go to them, purchasing would then get a notification to pay for the stock once it has arrived.
· Finance will manage most of the money in the business. They will pay salary based on what the agreed salary is from personnel and any bonuses. Finance will communicate with purchasing to give them the money to pay for the orders.
· Information such as tax rates will flow from the government into Tesco, they will then use the information so they know how much tax and VAT to pay. Tesco will keep records and tell the government how much they make so they know how much tax they should pay, they may also tell the government who they employ to prevent people claiming benefits while working for Tesco.
· Tesco’s marketing department may contact external commercial databases (companies which collect data on supermarkets and sell it) such as ‘the grocer’. Tesco may buy some expert analysis forecast predictions for trends.
· Tesco may do surveys which will collect information from outside the business which will be external. They may also look at what is popular which is doing market research.
1. The customer buys from sales
2. Sales give the customer a receipt
3. A copy of receipt goes to finance
4. Finance then tell purchasing what has been sold so they know how much stock they have and how much they need to order if any.
5. Purchasing will then contact the supplier to order more stock if required
6. The supplier will send an invoice with the stock to sales
7. Sales would give a copy of the invoice to finance so they can pay
8. Marketing will look at Commercial databases
9. Finance will pay for the access to the databases
10. Marketing will contact suppliers for new products
11. The government will contact personnel with tax rates for the month
12. Personnel will contact finance so they pay the tax, VAT and wages.
Characteristics of Good information
§ Timely means that the information is gathered in time for its purpose and that it is not out of date being too old. There would be no point giving stock levels for each day which are 2 weeks old.
§ Understandable by user, it must be the correct language and must be displayed usefully. It should be information and not just raw data, It shouldn’t be pages of numbers as the user wouldn’t understand it. Graphs and tables are much easier to understand.
To save money and to improve the quality of the information of the business you could keep electronic stock levels, this would keep more accurate records as it takes out a lot of possible human error. Every time the customer pays then all the items they bought should reduce the stock levels by one for each item. Then they can set up automatic stock ordering when stock levels get low or they can get notifications to order when stock levels are low. The information would be more reliable as people won’t count up wrong. You could set up a database with stock prices so they can be changed quickly rather than re labelling each product or having a product price list at the checkout. This will prevent price errors with different products and make the information more reliable and timely. The use of handheld devices could make it easier to find stock in the storage room and check if they have any stock at all from anywhere in the store. This would save time looking for products. Databases could record everything in the business and will produce lots of raw information which could be used to create graphs and reports which would be understandable by the user which is quality information. They could use the information to make decisions in the business and learn what sells well and what doesn’t. It won’t be based on each employees opinion and will be facts.