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.

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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