Management information systems practice questions.

Which statement best describes the purpose of a management information system (MIS)?

• A system that replaces all human managers with automated decision-making
• A system that processes and presents information to support decisions
• A system used only to pay employee wages
• A physical filing cabinet for paper records

Answer: A system that processes and presents information to support decisions

An MIS gathers and processes data into useful information that supports planning, control and decision-making by managers; it supports, rather than replaces, human judgement.

A retailer analyses years of transaction records to uncover hidden purchasing patterns and predict future demand. This process is best described as:

• Data mining
• Cybersecurity auditing
• Payroll processing
• Copyright registration

Answer: Data mining

Data mining examines large data sets to discover patterns and relationships that inform decisions such as demand forecasting and targeted marketing.

Explain a key ethical concern associated with a firm collecting and storing large volumes of customer data.

• Data can be stored at no cost, which is unethical
• Customer privacy may be breached and data misused or leaked
• Storing data always improves customer trust automatically
• Data collection is illegal in all circumstances

Answer: Customer privacy may be breached and data misused or leaked

Large-scale data collection raises privacy and security concerns, since misuse, unauthorised sharing or breaches can harm customers, linking MIS directly to the ethics concept.

A business uses software to store and manage all interactions with current and potential customers to improve service and sales. Identify this type of system.

• Enterprise resource planning (ERP)
• Customer relationship management
• Supply chain management (SCM)
• Data warehouse

Answer: Customer relationship management

A CRM system centralises customer data and interactions to strengthen relationships, retention and sales, distinct from ERP (whole-firm resources) or SCM (supplier logistics).

Determine one major risk to a business of relying on cloud computing for storing its data.

• Data can only ever be accessed from a single office computer
• Reliance on internet and third-party providers, risking outages
• Cloud storage makes it impossible to scale capacity
• Cloud computing eliminates all data security risk entirely

Answer: Reliance on internet and third-party providers, risking outages

Cloud computing offers scalability and remote access but creates reliance on connectivity and external providers, exposing the firm to outages, breaches and loss of direct control.

Suggest how a management information system can help a business manage change more effectively.

• By hiding data so managers cannot see market shifts
• By giving timely, accurate information to help managers decide
• By preventing any new technology from being adopted
• By guaranteeing that no change will ever be needed

Answer: By giving timely, accurate information to help managers decide

An MIS supplies up-to-date information so managers can detect market and internal changes early and respond proactively, connecting MIS to the change concept.