In this paper different financial data concepts such as vertical flow, downward flow, horizontal flow and inward and outward flow have been discussed in detail. They have been linked with the Kuali system very clearly and proper examples have been given to clarify these concepts. These concepts relate to the flow of information within an organization i.e from top management to middle managers and operatives etc.
The theory of the firm is defined as an activity that looks into the supply of goods and services to consumers by profit maximizing firms. In other words, the theory of the firm concerns different economic theories that explain the differing natures of the firms or companies or corporations including their very existence, behavior and relationships with the market.
Every organization or company whether large or small has a separate and unique organizational structure. The structure of the organization means; the different hierarchical levels of an organization coupled with the different divisions it is broken down into so that it becomes more manageable (Stephen, Maeve, Donald, Richard, & Alain, 2006). The structure of an organization is also defined by its objectives and its decision making needs, and powers.
Although the organizations have different purposes of existence; each one of them have one thing in common i.e. they share a common goal of managing the movement of information from one point to the other making it easier to understand especially when it is being provided to them by both internal and external publics. In short; managerial structure plays an important role in what the organizations learn about themselves as well as how, and in what way do they retain and use the knowledge and the information.
Information in any organization is never one way only; It always moves vertically, horizontally, diagonally, inwards or outwards. This is known as organizational information dimensions. When information moves from one point to another; it is summarized, filtered and manipulated before transmission to its final destination, which so describes its purpose.
Horizontal flow of information occurs when different divisions, or teams, or groups work together side by side within an organization to achieve a common goal or objective (Stephen et al., 2006). This means that the information that moves around is firstly filtered and summarized to suit the requirements of a division for the completion of the task at hand. As the people working with each other are likely on the same level of decision making, so this information is usually exchanged very frequently and is often changed teach time to suit the differing requirements as per the moment. In the Kuali Financial system, the ‘action lists and the community sourcing model’ are examples of horizontal flow of information (What’s the Kuali test drive? 2006).
On the other hand, vertical flow of information occurs when information is transferred from the non-managerial levels to operational level and from there to the tactical and finally the managerial levels within organization. As information passes upwards; at each level, it becomes more and more summarized or refined. For instance, at the non-managerial levels, the company staff deals directly with the suppliers, workers and customers, and the information is in its raw form; like purchase orders and customer invoices. However, the non-managerial staff deals with information in the form of transactions while the strategic management only concerns itself with the overall view of the organization’s performance. This can be further explained by use of a diagram as shown below. The ‘custom attribute’ and the ‘eDoc’ in the Kuali system are examples of how information is maintained, recorded and saved at the tactical level of an organization.
Downwards information flow involves information moving from higher levels of management to the non-managerial levels within an organization in the form of orders to be followed or advice on how to perform certain actions to bring about the intended results. Over here information flows from the managerial level to the tactical level, and finally the non-managerial level.
Last but not least, another way in which information moves from one source to another is the inwards-outwards flow diagram. In this case, information and data are sent from the customer, partners and shareholders to the organization in the form of raw data like competitor strengths and weaknesses, market strategies, company goals(Stephen et al., 2006). Knowledge of this data is crucial if the organization intends to survive and succeed in the long term. This is known as the inwards flow of information.
The outwards flow of information is information sent out to shareholders by the company in the form of reports. Marketing information provided by the organization to its marketing agents is also a form of outwards flow of information.
Bibliography
Stephen, H., Maeve, C., Donald, M., Richard, D., & Alain, P. (2006). Management Information Systems for the Information Age. Canada: McGraw-Hill Ryerson Higher Education.
What’s the Kuali test drive? (2006). Web.