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AIS: A system is a set of two or more interrelated components that interact to achieve a

goal. Systems are almost always composed of smaller subsystems, each performing a
specific function.
An accounting information system (AIS) consists of:
The people who operate the system and perform various function.
The procedures involved in collecting, processing, and storing data about the
organizations activities.
The data about the organizations processes.
The software used to process the organizations data.
The information technology infrastructure including computers, peripheral devices etc.
Important functions the AIS perform in an organization:
1 It collects and stores data about activities and transactions.
2 It processes data into information that is useful for making decisions.
3 It provides adequate controls to safeguard the organizations assets.
The role of AIS in the Value Chain: The objectives of most organization is to provide
value to their customers. This requires performing a number of different activities which
can be conceptualized as forming a value chain.
An organizations value chain consists of five primary activities which are mentioned
below:
Inbound logistics consists of receiving, storing and distributing the materials that are
inputs used by the organization to create the services and products that its sells.
Operations activities transform inputs into final product or services.
Outbound logistics are the activities involved in distributing finished product or
services to customers.
Marketing and sales refers to the activities involved in helping customers to buy the
organizations products or services.
Service activities provide post sale support to customers.
Organization also perform a number of other support activities that enable the five
primary activities to be performed efficiently and effectively.
Firm infrastructure refers to the accounting, finance, legal support and general
administration activities that are necessary for any organization to function.
Human resources activities include recruiting, hiring, training and providing employee
benefits and compensation.
Technology activities improve a product or service.
Purchasing includes all the activities involved in procuring raw materials, supplies,
machinery, and the buildings used to carry out the primary activities.
Decision Structure: Decisions vary in terms of the degree to which they are
structured.
Structured decisions are repetitive, routine, and understood well enough that they
can be delegated to lower-level employees in the organization. For example extending
credit to customers.
Semi structured decisions are characterized by incomplete rules for making the
decision and the need for subjective assessments and judgments to supplement formal
data analysis. For example, setting a marketing budget for a new product.

Unstructured decisions are nonrecurring and nonroutine. For example, choosing the
cover for a magazine.
Decision Scope: Decisions vary in terms of the scope of their effect.
Operational control is concerned with the effective and efficient performance of
specific tasks. For example, extending credit.
Management control is concerned with the effective and efficient use of resources for
accomplishing organizational objectives. For example, budgeting, product
improvements.
Strategic planning is concerned with establishing organizational objectives and
policies for accomplishing those objectives. For example, developing new product lines,
acquiring new business.
Business strategies:
A product differentiation strategy entails adding some features or services to the
product that are not provided by competitors. Do so allows a company to charge a
premium price to its customers.
A low cost strategy entails striving to be the most efficient producer of a product or
service.
Strategic Positions: There are three basic strategic position which are mentioned
below:
Variety-based strategic position involves producing or providing a subset of the
industrys product or services.
Need-based strategic position involves trying to serve most or all of the needs of a
particular group of customers.
Access-based strategic position involves serving a subset of customers who differ from
other customers in terms of factors such as geographic location or size, which creates
different requirements for serving those customers.
E-business refers to all uses of advances in information technology (IT), particularly
networking and communications technology, to improve the ways in which an
organization performs all of its business processes.
Ecommerce is a narrower concept that refers only to the electronic execution of
business transactions such as buying and selling.
E-Business Effects on Business Processes:
Electronic Data Interchange (EDI): Standard protocol, available since the 1970s,
for electronically transferring information between organizations and across
business processes. EDI improves accuracy and cuts costs.
Recent EDI Facilitators: Traditional EDI was expensive. New developments that
have removed this cost barrier are:
The Internet: Eliminates the need for special proprietary third-party
networks.
XML: Extensible Markup Language Set of standards for defining the
content of data on Web pages.

ebXML: Defines standards for coding common business documents.


Eliminates need for complex software to translate documents created by
different companies.
Three key properties of business transactions:
E-business processes have three fundamental characteristics that must be present in
any business transaction.
Validity: Both parties to a transaction must be able to authenticate the identity of the
other party to ensure that the transaction is valid and enforceable.
Integrity: Both parties to a transaction must have confidence that the information
exchanged is accurate and has not been altered during transmission process.
Privacy: The privacy of business transaction and any information exchanged in those
transactions must be maintained.
Types of Networks
Local area network (LAN) A local area network is a network of computers and
other devices, such as printers, that are located in close proximity to each other.
Wide area network (WAN) A wide area network is a network that covers a wide
geographic area. Wide area networks often are established with leased
telecommunication circuits.
Value-added networks (VAN) A value added network is a long distance
communication system designed and maintained by an independent company. It offers
specialized hardware and software to facilitate the exchange of data between various
private networks. Value-added networks are more reliable and secure than the Internet,
but they are also expensive.
The Internet is an international network of computers all linked together. The Internet is
a massive network of networks, a networking infrastructure.
Intranet: The term Intranet refers to internal networks that that can be navigated with
the same browser software on the internet but which are inaccessible to the public.
Extranets: Extranet link the intranets of two or more companies. An extranet is a
private network that uses Internet technology and the public telecommunication system
to securely share part of a business's information or operations with suppliers, vendors,
partners, customers, or other businesses.
E-Business Effects on Value Chain Activities:
Value Chain
Primary Activities
Inbound logistics
Operations
Outbound logistics
Sales and Marketing

Post-sale Support and Service

E-Business Opportunity
Acquisition of digitizable products.
Reduced inventory buffers.
Faster, more accurate production.
Distribution of digitizable products.
Continuous status tracking.
Improved customer support.
Reduced advertising costs.
More effective advertising.
Reduced costs.
24/7 Service availability.

Value Chain
Support Activities
Purchasing
Human Resources
Infrastructure

E-Business Opportunity
Source identification and reverse
auctions
Employee self-service
EFT, FEDI, other electronic
payments

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