Strategic Information System Case Study 2022

Running head: STRATEGIC INFORMATION SYSTEM
Strategic Information System
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EXECUTIVE SUMMARY
Rainbow Illusion is positioned as a 30-store retail chain which sells ready-to-wear
appeals for the young female consumers. The objective of the report was to analyze
the case study of Rainbow Illusion Systems and develop a report for the Chief
Executive Officer of the company in evaluating its process, risks along with internal
controls for its revenue cycle. The report revealed that fraud detection, along with
prevention considers pressures along with opportunities, can be recognized and
evaluated with regard to the risks that they pose on the company. Rainbow Illusion's
System has certain strengths, including several stores the makes use of a similar
system for calculating its sales transactions. After analyzing the case study of the
Rainbow Illusion Company, it has been evidenced that that are two significant
situational pressures that can increase the likelihood of fraud and these can include
sudden decrease in the revenue of the company or its market share. Evaluating the
risks of fraudulent reporting and enforcing internal controls within the organization is
necessary for managing the identified frauds. Moving on to the findings of the
reasons on why several companies use the aspect of distributed form of the
computing system, rather than the centralised one, it was found that the former
computing system is less costly and provides with effective results as well as better
performance level to the business organisations.

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Table of Contents
Introduction...............................................................................................................................3
Strengths in Rainbow Illusion’s System for Controlling Sales Transactions..................3
Problems Avoided by Incorporating Strength in System for Controlling Sales
Transactions.............................................................................................................................4
Situational Pressures that can Increase Likelihood of Fraud...........................................7
The synergy of distributed computer system rather than a centralised one..................8
Conclusion..............................................................................................................................10
References.............................................................................................................................12

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Introduction
Case study provided indicates that Rainbow Illusion is positioned as a 30-
store retail chain situated within New South Wales and Victories, which sells ready-
to-wear appeals for the young female consumers. The objective of the report is to
analyze the case study of Rainbow Illusion Systems and develop a report for the
Chief Executive Officer of the company in evaluating its process, risks along with
internal controls for its revenue cycle. Through evaluating this case study, certain
opportunities for computer fraud along with the security measures within the
electronic commerce that can be necessary to be taken in managing such risks will
be examined (Abbas 2017). After analyzing the case study, the report will consider
analyzing six strengths that are faced by the company's system in an attempt of
controlling the sales transactions. Moreover, it will also evaluate the ways in which
the company capitalizes on such strengths in dealing with any problem faced by the
company. Identification of two major situational factors will also be revealed that
might increase the likelihood of fraud within the company. Based on such analysis of
the case study, it will also be explained the reasons for which specific organizations
consider installing a distributed computing system rather than the one which is
centralized.
Strengths in Rainbow Illusion’s System for Controlling Sales Transactions
Rainbow Illusion's System has particular strengths, including several stores
the makes use of a similar system for calculating its sales transactions. The
strengths that are revealed in the case study of Rainbow Illusion System in
controlling their sales transactions are indicated below:

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 The sales staff within the company is young and is employed on a part-time
basis with the incentive-based volume of sales. To manage the sales
operations and transactions of the company in an effective manner, each
store has a full-time manager along with an assistant manager.
 Rainbow Illusion Company employs unsophisticated cash registers having
four-part sales invoice in order to record all the sales transactions, and such
sales invoices are employed regardless of the existing type of payment such
as cheque, cash or bank card.
 The salespeople are responsible for passing the sales invoice to the cashiers
that review the orders and inputs the sales. The assistant manager and the
manager are compensated on a salary base.
 The sales returns are handled in better in the opposite manner and the
involuntary sequential numbering that is made by the cash register
 A reconciliation report is prepared on a daily basis by the Assistant Manager
of rainbow Illusion System, and the combined bills are sequentially ordered
one after another.
 The data processing department is responsible for returning a weekly sales
and commission activity report to the manager for the review. In this strength
factor, the company ensures that the sales invoices, cash register tapes along
with all the return slips are forwarded daily to the central data processing
departments that are situated in the corporate headquarters for better
processing to take place (Bentley-Goode, Newton and Thompson 2017).

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Problems Avoided by Incorporating Strength in System for Controlling Sales
Transactions
Rainbow Illusion System's case study indicated that through incorporating the
identified strengths within the system, the company has been able to avoid certain
problems that can be faced in controlling sales transactions.
 Strength: Rainbow Illusion's System has certain strengths, including several
stores the makes use of a similar system for calculating its sales transactions.
The salespeople are young and work on a part-time basis with attaining
incentives based on the sales volume.
Problems Avoided: This strength of the company as observed from the case
study has facilitated in avoiding the issue related with the slow queue
management that is the people within the queue were serviced in a rapid
manner as the salesperson is too young. In addition, through paying them on
an hourly basis with incentive facilitates people in saving costs that also
promote healthy competition (Burgartz and Krämer 2016).
 Strength: Rainbow Illusion Company employs unsophisticated cash registers
having four-part sales invoices in order to attain support for recording all the
transactions.
Problems Avoided: This strength also facilitates in avoiding concerns about
any type of problem-related with the training of the new staff. It also supports
the company in delivering rapid services to consumers in an efficient manner.
Electronic cash registers existing within the company has facilitated Rainbow
Illusion Systems in dealing with issues related to active tracking of the
consumer transactions along with speeding the time of checkout. It also
facilitates in dealing with issues such as missed out consumer transactions

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tracking as such unsophisticated cash registers offer several advanced
options such as automatic locks allowing host the authorized user to view the
consumer transactions through logging in with a password (Francis, Hasan
and Li 2016). This strength of the company's unsophisticated cash registers
has addressed issues related to the data breach.
 Strengths: A reconciliation report is prepared on a daily basis by the
Assistant Manager of rainbow Illusion System, and the combined bills are
sequentially ordered one after another.
Problems Avoided: This strength of the company has successfully controlled
problems that can be faced by the company regarding the elimination of
accounting errors. The data processing department is responsible for
returning a weekly sales and commission activity report to the manager for the
review (Sadgrove 2016). In this strength factor, the company ensures that the
sales invoices, cash register tapes along with all the return slips are forwarded
daily to the central data processing departments that are situated in the
corporate headquarters for better processing to take place (Hansen, Saridakis
and Benson 2018). Reconciliation of the report on a daily basis is an excellent
way in which to maintain the bookkeeping identical with the aspects recorded
within the company. In addition, it has also successfully facilitated in
addressing errors relayed with managing the company's deposits correct.
 Strengths: The salespeople are responsible for passing the sales invoice to
the cashiers that reviews the orders and inputs the sales. The assistant
manager and the manager are compensated on a salary base.
Problems Avoided: This strength of the company facilitates in solving any
problem that can be faced by Rainbow Illusion Systems regarding the

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maintenance of better consumer relationships and maintaining the efficacy of
the credit department. Such smooth flow of passing sales invoices regularly to
the cashiers in successfully reviewing the orders and inputs of sales
addresses certain problems related with irregularities caused by the
employees in recording transactions (Sales and Carenys 2017). In addition,
such strength of the company has also facilitated the company in avoiding any
problems faced by Rainbow Illusion Systems regarding complex maintenance
of combined sales along with cash receipts journals (Ingram et al. 2015). The
practice by the salespeople to regularly pass sales invoice to the cashiers
facilitated the company in recording all the sales along with the cash receipts
encompassing the collection of the accounts receivables, sales invoices, total
of the daily cash register and cash sheets.
Situational Pressures that can Increase Likelihood of Fraud
Fraud detection, along with prevention, considers that pressures, along with
opportunities, can be recognized and evaluated with regard to the risks that they
pose on the company (Katsikeas et al. 2018). After analyzing the case study of the
Rainbow Illusion Company, it has been evidenced that that are two significant
situational pressures that can increase the likelihood of fraud and these are indicated
below:
 The sudden decrease in the revenue of the company or its market share
(Osadchy and Akhmetshin 2015). Such a situation tends to affect the financial
position of the company because of which it creates intense pressure to
exceed earnings expectations and in enhancing reported performance. In
such case, the company might attain the tendency of falsifying the value of
the asset where the company can forge the data indicated that in the balance

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sheet and accelerate the company's assets to make it appear more valuable
to the investors in an attempt for attaining high market shares (Leitch 2016).
 Financial pressure from the bonus plans that relies on the short term
economic performance. In a situating where the employees have been
blackmailed or threatened wither professionally or personally, then they are
likely to commit any fraudulent activities in the company (Madhani 2015). This
fraud can take place where the employees working within the company
belong to the key positions and have access to vital business funds along with
other resources. They might exploit their positions and can commit fraud in
the business. Assessing the risk of fraudulent financial reporting due to this
situational factor necessitates the implementation of internal controls within
the organization.
In dealing with such situational pressures that can enhance the likelihood of
the fraud in the company, Rainbow Illusion System must consider setting a suitable
organizations structure for establishing a corporate environment that further
contributes to the maintenance of integrity within the sales transaction and reporting
processes of the company (Mitchell et al. 2018). In addition, evaluating the risks of
fraudulent reporting and enforcing internal controls within the organization is
necessary for managing the identified frauds.
The synergy of distributed computer system rather than a centralised one
As opined by Benckendorff, Xiang and Sheldon (2019), the network
technologies connected to the subject of the computer has been known to witness
massive changes as well as improvements in the modern business market. After the
practical introduction of the internet, the synergy of networking has led to the

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achievements of several novel advancements like distributed computing system as
well as a centralised computing system. In this connection, the given report is hereby
focused on describing the significant reasons which explain why some business
organisations choose the prospect of distributed computer system rather than
selecting the centralised one.
According to the viewpoint of Roman, Lopez and Mambo (2018), the
centralised systems are the ones that the clients or the architecture of the server use
in the synergy where one or more than one client nodes are known to be directly
connected to the synergy of a central server. In addition to this, the centralised
systems are chosen by the organisations because they are termed to be intuitive as
well as easy to understand as well as define the computerised system. However, it
was examined through the help of several past studies that the centralised
computing system has lots of drawbacks more than the advantages the same
provides. Concerning these drawbacks, it was analysed that the results gained out of
the centralised form of the computing system is ineffective in nature. Not only this,
but the centralised computing system is even recognised to be costly in the
connection of dealing with the profound volume of processing the transactional data
as well as rendering for tons of the online users in the current technology market
(Periasamy and Raj 2016).
In lieu of this, as opined by Card (2018), distributed form of computing system
is defined as the use of the distributed system in the consideration of solving a single
significant problem by breaking the same down into several activities where each of
the activity is computed in the individual computers of the part of the distributed
system. The distributed form of the computing system is known to consist of more

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than one self-mode directed computer that is recognised to communicate through
the help of a network.
Comparison
As compared to the outcomes of a centralised computing system to be
ineffective, the outcomes of the distributed form of a computing system are
recognised to be co-ordinated in nature with the help of the shared resources. This is
because the synergy of the shared resources helps in better communication of the
information with the other nodes to achieve the individual activities (Goldie 2016).
Distributed form of the computing system is not as easy to work with as the
centralised one is, but the same is more dynamic in nature and has more
opportunities to work with than the centralised one. The distributed computing
system helps in performing the designated computing tasks as compared to the
centralised computing system, which does not allow for the same.
Moreover, it was examined that the distributed computing system provides its
users with a synergy of better price and performance ratio as compared to that of the
centralised computer systems (Tanenbaum 2016). This is because adding
microprocessors in the part of computers to work with the same is considered to be
far more economical than the mainframes. In addition to this, the distributed form of
computing systems is recognised to have better and effective computational power
as compared to the centralised (mainframe) ones. This is so because the former
form of computing system provides the users with the prospect of the incremental
growth in the consideration that the organisations can add the synergy of software as
well as computation power in the increment as and whenever the business
organisation needs the same.

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In light of the above-mentioned pieces of evidence, it can be clearly stated
that these are termed to be the significant reasons why some of the companies are
comfortable in the use of the distributed form of the computing system, rather than
the centralised ones.
Conclusion
Given the findings based on the strategic information system based on the 30-
store retail chain, the rainbow illusion, it can be seen that the fraud detection along
with prevention considers pressures along with opportunities can be recognized and
evaluated with regard to the risks that are opposed on the concerned company. The
primary strength of the company has been analysed as the several stores of the
company that makes use of a similar system for calculating its sales transactions.
Moreover, concerned with the findings that are based on the synergy of the
distribution as well as the centralised form of computing systems, it was found that
the companies use the synergy of a distributed system as the same provides it with
more benefits and is also less costly than the centralised one.

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References
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Benckendorff, P.J., Xiang, Z. and Sheldon, P.J., 2019. Tourism information
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Bentley-Goode, K.A., Newton, N.J. and Thompson, A.M., 2017. Business strategy,
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Burgartz, T. and Krämer, A., 2016. Measures to Understand and Control Customer
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Card, S.K., 2018. The psychology of human-computer interaction. Crc Press.
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and real earnings management. Journal of Accounting and Public Policy, 35(5),
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Hansen, J.M., Saridakis, G. and Benson, V., 2018. Risk, trust, and the interaction of
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media for transactions. Computers in Human Behavior, 80, pp.197-206.
Ingram, T.N., LaForge, R.W., Williams, M.R. and Schwepker Jr, C.H., 2015. Sales
management: Analysis and decision making. Routledge.

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Katsikeas, C.S., Auh, S., Spyropoulou, S. and Menguc, B., 2018. Unpacking the
relationship between sales control and salesperson performance: a regulatory fit
perspective. Journal of Marketing, 82(3), pp.45-69.
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