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Value

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Value & Importance of Information Value of Information Information is a resource fundamental to the success of any business As such it has monetary value (i.e. its ... – PowerPoint PPT presentation

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Title: Value


1
Value Importance of Information
2
Value of Information
  • Information is a resource fundamental to the
    success of any business
  • As such it has monetary value (i.e. its worth
    can be measured in money terms) and it can be
    bought and sold
  • Good quality information can be used to
  • Maximise sales
  • Cut costs
  • Develop new products
  • Help make good management decisions

3
Factors Affecting Value
  • The value of information depends on a number of
    factors. The value of information depends on it
    being
  • Up-to-date
  • Complete
  • Fit for intended use (relevant)
  • Accurate
  • From a reliable source
  • Comprehensible

Potential use of the information is an important
factor in its value. The more potential uses
information has the more valuable it will be.
Use these if asked for THREE factors on an exam
question
4
Up-to date?
  • Dated information may be worse than useless to a
    business
  • Brokers who buy and sell shares need to have VERY
    up-to-date information because share prices
    change so rapidly.
  • A holiday company using results from a 2 year old
    survey to pre-book hotel places for next season
    may over or underbook places due to changing
    customer tastes.
  • A credit card company unaware that a customer now
    earns twice as much as when the card was issued
    may fail to increase his/her credit limit.

5
Complete?
  • Incomplete information can be as damaging as
    inaccurate information as it may give an
    organisation a misleading picture on which they
    base management decisions.
  • Sales data taken from only two quarters of the
    year may give a distorted picture of average
    business performance
  • Analysis of national sales may give inaccurate
    results if only England and Scotland are included
    in the analysis

6
Intended Use (Relevance)?
  • Information needs to be relevant to its intended
    use
  • A business buys market research results from a
    survey carried out in the south of England.
    Although the information gathered may be accurate
    and up-to-date it may not be relevant to the
    north, where the company does most of its
    business, because trends and spending habits are
    different.
  • A study of female buying habits will be largely
    irrelevant when targeting male customers

7
Accuracy?
  • Data doesnt have to be 100 accurate but must be
    accurate enough for its purpose
  • Incorrectly recorded stock levels may lead to
    empty shelves or over-ordering of new stock (both
    are BAD for the organisation)
  • Economic forecasts for variables such as interest
    rates, exchange rates and the cost of raw
    materials need to be accurate if businesses are
    to plan effectively for the future

8
Source (Reliability)?
  • If the information source is reliable the
    organisation doesnt need to spend as long/ as
    much money checking the validity of information
  • The news agency Reuters has a good reputation as
    a reliable news source and can charge more for
    information

9
Comprehensible?
  • Information should be in a format that the reader
    can understand or take on board quickly
  • Managers may need to make rapid decisions
  • A picture is worth a thousand words i.e.
    summarised information can be valuable
  • The sales map on the right immediately highlights
    areas of high/low sales.

10
Sources of Information
  • Organisations can obtain information from a
    number of internal/external sources some of which
    are free
  • By-product of processing can you give examples?
  • The electoral roll
  • Internet
  • Government reports/surveys
  • Even when information is free there are costs
    involved in entering data and converting it into
    a usable format. These costs are called overheads.

11
Overheads 1
  • There are a number of factors involved in how
    costly information is to acquire and keep
    up-to-date
  • How its collected
  • If collected directly people may have to be paid
    to give their opinions. It will cost money to
    produce and send out questionnaires. If collected
    indirectly the organisation may have to pay a
    third party to acquire the information.
  • How its input
  • If entered via a keyboard data entry operators
    will need to be paid. Even if automated methods
    such as OMR are used someone will have to be paid
    to operate the equipment

12
Overheads 2
  • Processing the information
  • The validity of information may need to be
    checked to ensure reliability. Once checked
    processing the data into a useable/useful format
    will require the purchase of hardware and
    software
  • Data Maintenance
  • How often does the data needed to be collected or
    updated. Some information ages very quickly and
    will need to be continually updated to remain
    relevant to the organisation

13
Revision Tasks
  • Use your textbook and Internet sources to make
    notes on Value and Importance of Information.
    Your notes should cover
  • Why information has value
  • Factors that determine the value of information
  • Overheads (costs) involved in ensuring that
    information is accurate and up-to-date
  • Answer the questions on this worksheet
  • http//www.fatmax.org/as1/102/valueofinfo.doc
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