Strategic Information Systems

Table of content

Executive Summary

Introduction

Analysis

Situational Pressure

Distributed vs Centralized System

Conclusion & Recommendation

Reference

Executive Summary of Harda Fashion Analysis Case Study

HARDA Fashion is famous fashion brand for teenager clothes, Chief Executive officer wants to evaluate its processes, risks, and internal controls for its revenue cycle. He is looking for report which should include the four key points:-

  • Identify strengths in HARDA’s system for Sales transactions.
  • Whether such strengths are being used and incorporated in the system to get the full benefit.
  • Report also has identified two situational pressure that could increase the risk of fraud.
  • Report has also highlighted to how distributed computer system is an option than centralised one.

Introduction to Harda Fashion Analysis Case Study

HARDA Fashion has 20 stores across USA, which shows that it is one of popular fashion brand of USA. The system and processes especially sales has to be very fast, automated and sophisticated. Because the company deals with the teenager clothes, and obvious to have more and more teenager to be their customers. Young generation is very techsavy and their expectation is to have a smooth experience while shopping also so sales team including the sales transaction and billing team need to be very much fast and techsavy to give them that experience. To provide the report, methodology used is to identify the strength areas and analyse it further and reach to a conclusion and suggest recommendation. The Company is currently having many processes but currently the case study refers to a particular process of sales transaction and tries to identify their strengths in the process how it is helpful in avoiding the issues and is there any improvement scope available. And what system the company should adopt if they want to i.e distributed system or centralised system.

Analysis

HARDA Fashion has a very systematic and defined sales transaction process as follow:-

At present it seems that the overall sale transaction process in the stores is quite strong due to clear segregation of duties of sales team and cash team and it is also important that do daily closure of all sales transaction. (Schild, 2019) say that there assessment four core areas for creating an excellent of that the store locator, pre-shopping services, cross-channel communication, and after sales service. 

And as per the information provided in the case study following are the Six top strengths which are identified:-

  1. Strength: The sale people are young and are on part time basis with incentive based on sales volume.

Problem(s) Avoided: This avoids the problem of slow queue management i.e. the people in queue are serviced very fast as the sales person are young. Also paying them on hourly basis with incentive helps to save cost and also promotes healthy competition.

  1. Strength: Company uses unsophisticated cash registers with four part sales invoice to record each transaction.

Problem(s) Avoided: This avoids any sort of problem associated with training the new staffs. It also helps in delivering quick service to the customers and solving problems quickly.

  1. Strength: The sales person passes the sales invoice to the cashier who reviews the order and inputs the sale.

Problem(s) Avoided: This helps in distributing the workload among the workers which helps in proper and hassle-free experience for the customers. Also it helps in verifying the entries done by the sales person so that all mistakes are rectified.

  1. Strength: Returns are handled exactly in the opposite manner.

Problem(s) Avoided: The systematic approach towards purchase counter and the return policy helps the customers to solve their issues easily. This also helps in proper recording of all the activities taking place in the company.

  1. Strength: A daily reconciliation report is prepared by the Assistant manager.

Problem(s) Avoided: Preparing a daily reconciliation report helps in overlooking the daily working of the stores. This helps to identify if there is any mismatch in the sales and the cash and bank balances. Also it helps to keep track of the inventories and stocks required for the coming days.

  1. Strength: The data processing department returns a weekly sales and commission activity report to the manager for review.

Problem(s) Avoided: The weekly sales and commission activity report helps the manager to overlook the functioning of a store. It helps to identify key strengths and weaknesses. Also it helps in inventory management and staff management as well.

(Global Convience Store, 2017) According to it “With $1.5 trillion, €2.1 trillion and £216 billion in hard cash circulating the US, EU and British markets, retailers need to adopt forward-thinking processes to secure the point-of-sale from theft”

So it very important to put extra care and make the system mistake proof , because sales transaction process is the key to this retail stores , (Marendra, 2019) suggested POS or point of sales software as way to control employees for theft.

Situational Pressures

Situational Pressures can also be termed as psychological pressure on a individual to behave in certain manner. A consequence of this type of pressure which lead to act in a certain way may be a likelihood that despite an individual's personality, they behave that way. As per (Batson, 2015), “situational pressures that can keep us from acting morally: Stimulus overload, preoccupation, and framing can keep us from recognizing the moral relevance of events”. Sometimes high pressure of acting can lead to believe that we cannot do anything. Environmental cues can also cause to misperceive the level of moral concern and need to act upon it , inhibiting that moral motivation experience. Even when one experience it, competing motives, both moral and nonmoral, might prevent one to act on it. These situational pressures might be pernicious when applied over time in organizations. It produces slowly and Slowly escalations and issues of moral violation which can create war atrocities, defective products and deceptive behaviour and practices in business and genocide.

(Roszkowska, 2020) Explains in his article The “Organizational Moral Structure” is proposed as a reflective framework for humanistic management and as an invitation to further research in this field. It provide recommendations as to how a manager can be oriented for humanistic management and can use OMS to promote and secure well-being, dignity and morality of the employees in an organisation.

In case of Cash Sales if the salesperson and cashier want to avoid the entry of any transaction they can do the same by not putting the sales invoice in Sales register and not recording the transaction in cash register. In case of Sales through cheques if they are accepted without any approvals and Sales invoice is not put in sales register it can lead to fraud. But all these thing can be only be possible if there moral behaviour of employee allows them to do so. It is very important for the management to talk to employees to keep their moral high, appreciate their work so that they are not indulging themselves in such kind of practices. A sense of belonging towards the company is very important for a employee to behave ethically every time.

In case the product details are manipulated then the sales invoice will be incorrect. The customer will pay higher price whereas the invoice will show a lower price

  1. The cashier and sales assistant may collude and this might result in unreported sales without invoicing, and because the pressure can lead to this type of situation.
  2. Discount is entered manually and there are no card rates for the same which gives scope of under-reporting of sales, this practice may lead to some possible frauds because in case there is a person who is morally not that sound or has some grievance from the management can misuse this situation and give undesired discount to favour some customer. He or she can include and influence others also to do in such a way. So it is very important for the management to look into this aspect and may be include some more level of authority required to give a approval for discount.

Distributed System vs. Centralized System

In centralized system, there is one system for processing data (called server). However, in distributed system, the data processing is distributed to multiple systems.

(Anon., n.d.)In a centralized environment, all calculations are done on one particular computer system, such as a dedicated server for processing data. In a distributed scenario, however, the calculation is distributed to multiple computers which join forces to solve the task. For example, a large amount of data can be divided and sent to particular computers which, will then make their part of the calculation.

Distributed computing, on the other hand, means that not all transactions are processed in the same location, but that the distributed processors are still under the control of a single entity. You can think about it as a gas station: while you can get your gas from different branches of, say, Shell, the resource is still distributed by the same company.

Difference between two systems- Comparative Summary

(Anon., n.d.) has identified various difference and comparison points:-

Security:- Centralized System of Accounting Information : Data can be edited , added or deleted in the this type if someone has server access , which can do more harm as it will impact all the stores together whereas in Distributed System , all data is generally distributed and based on different nodes of the network. And if something is edited in anyways i.e added or deleted in any of the node it will show in all the computer attached to that network. Any legal medication or amendment are accepted and implemented automatically in all network computers. Sometimes the data will be copied to match other nodes. Therefore, the system is self-sufficient and self-regulating. Distributed databases are much more protected against hacking attacks and accidental changes in the system.

Availability: under centralized system, in case of too many transaction requests the server may hang or break down sometimes gets very slow. So again it these type of system will affect all the stores together. Whereas in Distributed system of information can stand significant pressure because of its distributive nature. It can take heavy loads of multiple transactions where all the requests are distributed among different nodes. So, the pressure will not fall on a single computer, but on the complete network.

Accessibility:- Centralised system of information has storages issues also, you will not be able to obtain your information unless the problems are solved, whereas in Distributed system there are number of computer and network is large , and DDOS attacks are only possible if their capacity is larger than that of network which gives it higher reliability and safety. So, generally it is considered that distributed networks are more secure.

Speed: Speed wise it can be counted that centralized system due to its feature has speed use whereas distributed system with multiple nodes will have much better speed

Maintenance:-

Low: Centralized systems whereas it is high in Distributed system.

Flexibility

(Anon., n.d.) but from Flexibility point of view is distributed system is more flexible so in case one need to change any code or software it can be easily done without putting the whole system on hold.

Continuity

If one machine crashes, still the system as a whole can survive in distributed system. But this is not the case with centralized system. If server crashes, none of the other machines can work.

Hence, some companies would choose to install a distributed computer system rather than a centralised one.

(Anon., n.d.), as per the article “now a days POS functionality has improved a lot with latest advancements which are on the horizon. New upcoming technology, customers are expecting best available service in real time from reputed favourite stores” this puts more pressure on the retail industry and HARDA Fashion Management to implement the best available solution in their stores. And most companies specially in the retail sector prefer the distributed system because of its multiple benefits as analysed above.

Companies would choose distributed computer system rather than a centralized one so that there is one point of sale and all the details are recorded in the system itself rather than manual recording of transactions and avoiding fraud. The product details should be put in the system so that there is no chance of manipulation and there is no need to maintain Sales register and cash register separately. It will go through the system itself. Reconciliation will be much easier. It will help in cost cutting and reduction of employees as well.

Conclusion and Recommendation on Harda Fashion Analysis Case Study

Though the Sales transaction process of HARDA Fashion has lot of strong points but still there Is scope for the improvements. Current system avoids Audit issues and because it is properly documented. The separation of duties helps in reducing the chances of fraud. Generally a strong sales transaction system Separation of duties between Salesperson and Cashier: this will help to control the problems of theft, invoice errors and frauds. Moreover there are few POS are also available which can be implemented (Business.org Staff Writer, 2020) suggests that the best POS systems combine payment processing, inventory management and customer management, accounting , payroll, and other related services. Into POS hardware and software. The segregation of duties will control the frauds like changing prices, false sales, etc. Cash register mechanically assigns a consecutive number to the transaction: this will eliminate the issues like theft as well as the loss of an invoice that remains undetected. It can be used as an audit tool. Cash receipts separate from accounting records: It helps in controlling the issues like cash pocketing, changing accounting records, etc. Supervision helps in controlling the dishonesty and theft (that is unnoticed) (Bellomy, 2014) recommends to “Maintain adequate segregation of duties in the cash deposit process”.

Determining appropriate and fixed salary to employees: This discourages employees to engage in inappropriate transactions to earn incorrect commissions through inappropriate credit approvals.

Application of same system for controlling sales transactions: The same procedure of controlling sales transactions should be applied throughout the organization. This makes the process of auditing easier and less time consuming.

Recommendation perspective it is important to look into the situational pressure which might give a chance to fraud so it always better only not only to have distributed system but at top a centralized system of operation, and automate everything to avoid manual intervention to make system mistake proof and fraud proof also. As far as far manual discount entry is concerned they should immediately take some remedial step to either fix a maximum % or insert another level of approving authority to avoid any chances of malpractices.

References for Harda Fashion Analysis Case Study

Anon., n.d. 8-best-practices-future-pos. [Online]
Available at: https://www.rpesolutions.com/8-best-practices-future-pos/

Anon., n.d. decentralized-distributed-centralized. [Online]
Available at: https://berty.tech/blog/decentralized-distributed-centralized

Anon., n.d. redes-centralizadas-vs-distribuidas. [Online]
Available at: https://icommunity.io/en/redes-centralizadas-vs-distribuidas/

Anon., n.d. what-is-the-difference-between-centralized-distributed-and-decentralized-ai-computing. [Online]
Available at: https://blog.nebulaai.org/what-is-the-difference-between-centralized-distributed-and-decentralized-ai-computing

Batson, C. D., 2015. Situational Pressure. In: What is Wrong with Morality. s.l.:Oxford Scholarship.

Bellomy, G. G., 2014. internal-controls-retail-store. [Online]
Available at: https://www.withum.com/resources/internal-controls-retail-store/
[Accessed August 2020].

Business.org Staff Writer, 2020. point-of-sale/best-pos-systems-for-business. [Online]
Available at: https://www.business.org/software/point-of-sale/best-pos-systems-for-business/
[Accessed 29 August 2020].

Global Convience Store, 2017. five-simple-best-practices-for-preventing-theft-at-the-point-of-sale/. [Online]
Available at: https://www.globalconveniencestorefocus.co.uk/features/five-simple-best-practices-for-preventing-theft-at-the-point-of-sale/
[Accessed 29 August 2020].

Marendra, D., 2019. prevent-employee-theft-using-pos-software/. [Online]
Available at: https://www.hashmicro.com/blog/prevent-employee-theft-using-pos-software/
[Accessed 29 August 2020].

Roszkowska, P., 2020. Organizational Factors in the Individual Ethical Behaviour. The Notion of the “Organizational Moral Structure. Humanistic Management Journal (.

Schild, G., 2019. retail-best-practice. [Online]
Available at: https://www.brand-experts.com/brand-best-practice/retail-best-practice/

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