Information Needs of an Organization

Each component of the business environment creates informational needs for managers. A properly designed MIS assists in satisfying these informational needs. Both the internal and external environmental factors affect the organization and must therefore be accounted for in the MIS. For example, without a keen awareness of information flows in the external environment, a firm may not be able to respond to unfair competitive practices. This can be seen in the figure below.

                                                          Figure: Management Information Needs

It can be seen from the figure that MIS draws information from the various internal functional areas, such as production, marketing and finance. It then integrates this information with that of the external environment, resulting in creation of an information system. Information about the two environments are needed if the organization is to perform effectively. For example, the marketing manager will probably not perform well without knowledge of the market (customer) the firm is attempting to serve. Similarly, lack of information about the type and availability of manpower in certain areas may have negative effect on the production and operations function in an organization. Both the internal and external environments interact and these relationships must be reflected in the information system in order to satisfy the informational needs of an organization.