Discuss the four factors that determine how useful information is to a manager, and give a specific business example of each of these factors.
The four factors that determine usefulness of information are completeness, timeliness, quality and relevance.
Incomplete information can lead to bad decisions, because if a decision is made with only some of the information chances are it will not be the right decision. The missing information could be crucial. Let’s say a shoe store manager learns that Popup shoes are becoming a new fad. She orders 100 pairs in the most popular shoe colors: brown, black and white. Then, she learns that what makes Popup shoes popular is that they come in wild colors and patterns. She has the right kind of shoes, but the wrong colors and patterns. The shoes she ordered are not going to sell, and her customers will go to other stores after being disappointed at her lack of appropriate selection.
The timeliness of information is crucial for a manager. Let’s say a restaurant owner learns that tomorrow is the local high school’s senior prom. He wants to run a special, with rates and events that teenagers would find interesting. The only problem is, all of the kids have already made reservations at other restaurants. He did not get the information in time to make use of it.
The quality of information is important. If the information is wrong, or low-quality, the manager might make a decision that has a negative impact on the business. Decisions based on the low quality information will rarely be good decisions. For example, let’s say the business is a book store. A manager learns that a concert is coming to town: the Hot Boys Band. She orders books, CDs and posters in anticipation of a run on products related to the band. Then she learns that it is actually the Hot Dog Band that is coming to town. All of those products are not going to sell as much as she thought, because the information was low quality
The relevance of information is the last necessary consideration. Managers are inundated with information today. Good managers have to be able to separate the relevant information from the noise. Let’s say a grocery store manager is reading a newspaper looking for trends about his city. The newspaper is running stories on an influx of stray animals to shelters, high unemployment and a new nursing home opening. All stories could impact his business, but let’s say he focuses on the high unemployment rate and runs sales on necessity items. Business does not really pick up, because even with sales he cannot compete with local retail giants. The relevant story was actually the new nursing home opening. If he had instituted a delivery service, sales would have shot up.