Strategic Information Systems Analysis: Rainbow Illusion Case Study

This case study analyzes Rainbow Illusion, a garment industry company, focusing on its strategic information systems. The report examines the company's strengths in managing sales transactions, including its distributed responsibilities and manual recording system, which helps prevent technical threats. It identifies situational pressures that could increase the likelihood of fraud and discusses the advantages and disadvantages of centralized and distributed computer systems. The study delves into the revenue, expenditure, payroll, and conversion cycles, highlighting the importance of internal controls and the risks associated with computer-based systems. The case study also explores the role of ethics, computer fraud, and security measures in electronic commerce. The company's well-distributed system of duties and responsibilities, along with its daily reconciliation reports, aids in decision-making and resource safeguarding. However, it also acknowledges the potential for employee and management fraud and the importance of proper controls. The analysis emphasizes the need for companies to implement effective strategies to protect themselves from fraud and ensure the integrity of their information systems.

Running head: STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND
ENTERPRISE
Strategic Information Systems for Business and Enterprise
Name of the Student:
Name of the University:
Author Note

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STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE
Table of Contents
Introduction...................................................................................................................3
Identification of strengths for the controlling of sales transactions by Rainbow
Illusions.........................................................................................................................3
Several problems have been eradicated by Rainbow Illusion by including the
strengths in its system of sales transactions................................................................4
Situational pressures increasing the likelihood of adopting frauds..............................5
Centralized and Distributed Computer System............................................................5
Conclusion....................................................................................................................6
Reference list................................................................................................................7

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Executive Summary
The report has been prepared for the manager of Rainbow Illusion to help him
decide and take the correct managerial decisions. The company manager maintains
the books of records and updates it daily. Due to the books being daily updated,
there is a preparation of reconciliation reports every day which enables the company
to keep a check on its operations. Many companies adopt a distributed computing
system for their business.

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Introduction
The Chief Executive Officer of Rainbow Illusion has used the help of this
report to assess various aspects of the garment industry. The apparel industry of
women covers a wide range of products that include blouses, hats, outerwear, skirts,
slacks, footwear, accessories, dresses and jeans. The clothing used for the
production of these products do not make use of are of various kinds like rubber, fur,
plastic or leather. The industry purchases the fabric and material from the producers
of textile (Burchielli, Delaney and Coventry 2014). Further, the fabrics and materials
are cut and stitched to produce the apparels for both women and girls. The operators
in this industry face the challenge of the ongoing conditions of trading. The imports of
garments have increased immensely leading to the creation of pressure on the local
manufacturers. The number of industry enterprises has fallen as the increase in the
exit from the industry of the firms or the production moves offshore (Delaney,
Burchielli and Connor 2015). The manufacturers of Australia have started focusing
on the production of higher value-added products. The intense competition in import
has led to a decrease in industry revenue. New competitors who are trying to enter
this industry market. The establishment of the brand name, expertise in marketing
and capability to make changes in the goods and services that are produced
following the market conditions are a few of the critical factors for the success of this
industry. The company has a well-distributed and managed responsibilities. It adopts
measures to protect itself from the exposure of information system threats. There is
an implementation of the internal control system in the business for safeguarding its
information. The proper conduct of business operations has helped the company to
overcome several problems that will be further discussed (Księżak 2016). However,
certain situations where even the management or the employees get involved in
frauds. Two such situational pressures face in Rainbow Illusions have been
discussed. It also discusses the advantages and disadvantages of the particular type
of computer systems like a distributed computer system and a centralized computer
system.
Identification of strengths for the controlling of sales transactions by Rainbow
Illusions
The management of Rainbow Illusion has a well-distributed and divided
system of duties and responsibilities. Due to this policy, they have a manager and
assistant manager appointed for every different store (Robles 2017). These
managers take care of the operations and performances of the stores they have
been allocated (Michelucci, De Marco and Tanda 2016). They do not bother
themselves with the outcome of other stores as there are different heads appointed
to look after them. The employee workforce consists of young people into the
business. The business does not operate its accounting of records through the
Accounting Information System. Instead, it conducts the process by a manual
recording of transactions (Libby 2017). The AIS prevents it from the technical threats
which could have affected its books of records if the mechanical method of
accounting had been used. The cash register was segregated into four divisions for
recording every individual transaction that has been shown by the sales invoices.
The payment mode of cash, bank card or cheque are done irrespective of the
different invoices. The sales manager records the employee number and a detailed
record of its transactions, including the description, unit price, clothes, quantity and
class (Schmitz and Ganesan 2014). The total figure of sales, calculation of discounts

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at places required, sales tax calculation and preparation of summations are also
done by him. A duplicate of the sales invoice is retained in the book of sales and
another clone is given to the cashier by the salesperson. The reviewing of the
invoice is done by the cashier post, which the transactions are recorded. The cashier
handles the credit approval from the sales made and subsequently approves all the
deals that have been paid with the help of cheque. There are three copies made of
the invoice. One copy was given to the customer by the cashier, the second copy
was retained in the store and the third copy was kept for the bank card, in case of
any deposit. The returns of the company are managed in the reverse order where
the return slip was issued by the cashier. In the end, the sales invoices are ordered
sequentially by the cashier every day (Aini, Alwiyah and Putri 2019). He then takes
the totals for the cash register for the accounting of cash, credit card and cash
returns along with the sales by cheque. The reconciliation of the aggregates is done
to the consecutive sales invoice, return slips and the tapes of the cash register by
the assistant manager. The store manager for every store reviews the reconciliation
report that is prepared every day by the assistant manager. The reviewing of the
cheque, credit card sales and cash along with the inclusion of credit card invoices
are taken into the deposits by the manager (Sculley et al. 2014). After these details
are reviewed, the daily bank deposit is prepared. The deposit is made at the bank by
the manager and the files are validated using the deposit slip. The central data
department of processing receives every day the sales invoice, return slips and cash
register slips. A weekly report on sales is answered by the data processing
department and a commission activity report for the purpose of reviewing by its
manager.
Several problems have been eradicated by Rainbow Illusion by including the
strengths in its system of sales transactions
The data has been organized, processed, captured and stored in a manner
that has assisted the manager for proper decision making. The distribution of control
to the respective stores has helped to safeguard its resources. The daily preparation
of reports helps the managers to know and make necessary arrangements for the
sale or purchase of products (Quinn et al. 2015). The reporting function and general
ledger help to prepare the performance reports and financial statements. The
activities of a revenue cycle that include entry of the sales order, shipping, billing and
the collection of cash along with the updating of ledgers are all performed by the
business. The sales order entry records the orders that have been received, the
check of credits and the inventory available is checked. The daily reviewing of
reports by the manager ensures the validity of the transactions, disclosure of all the
records, compliance of the rules and regulations and proper authorization of the
documents is verified. The manual recording ensures the understandability as it has
been presented in a useful and understandable manner. The timely receiving of data
ensures effective decision making. The completeness of the information makes sure
no information has been left out. As the data is recorded by the managers of the
store daily, it is sufficiently reliable and relevant to the transactions. There is no
dependency on the computers for doing the work, so it prevents the delay of work. If
the transactions had been recorded on any day the managers felt, it would create a
lot of confusion and chaos when the records had to be tracked. The adoption of
proper techniques to record the transactions makes the process of auditing easier.
The following of the correct policies creates validity of the records. The involvement
of the youth population in their employment enables advanced and faster ways of the

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activities being performed (Buckingham 2015). The employment base of the
company can also be extended due to this particular strength as young people are
very enthusiastic about working. The central processing department at the
headquarter plays the role of backing up the data of the various stores.
Situational pressures increasing the likelihood of adopting frauds
The conventional method of employee fraud taken by most employees is the
robbing of the company assets. The theft, embezzlement and pilfering of assets
named to a few are the considerable frauds by employees. All varieties of fraud
result in the suffering of loss by the company due to the unlawful theft by the
employee from the employer (Clor-Proell, Kaplan and Proell 2015). It takes around
18 months on an average for an employer to detect the employee who is committing
the fraud of stealing. In most of the situations, when a different employee encounters
in the same accident, he reports the matter to the employer and draws his attention
to the fraud (Manurung, Suhartadi and Saefudin 2015). The statistics of the numbers
of theft and fraud by employees are increasing every day, which amount to billions of
dollars of loss all over the world. The automated use of recording transactions has
increased the chances of embezzlement of large amounts of money by the
manipulation of data on the computer. In general, the management also commits
several kinds of frauds which is to show a positive overall image of the company
(Comer 2017). They have not performed directly to line the pockets of the offender.
They are done to obtain more types of favourable financing or increase the share
price. The management fraud occurs at higher levels than the regular internal control
by the management (Johnson, Leenders and McCue 2017). The main intention is to
showcase a better and accurate picture of the firm. If the assets have been
misappropriated, the way involved is very complex and devious. This type of fraud is
known as Financial Management Fraud.
Centralized and Distributed Computer System
A distributed computer system is a structure of computation related to the
distributed systems. It is indicated as a system of multiple computers that are located
at various locations and are interlinked using a network. They are used to solve high
levels of computation without the use of expensive supercomputers. When a
collection of different computers look to be of a single logical system to their clients,
it is referred to as a distributed system of computing. The combination of the
machines over a network using the Wide Area Network or Local Area Network and
conversing with one another to allow the various portions of the distributed
applications to run on multiple computers from the point of any location ( Vejlgaard et
al. 2017). All the nodes on the computing system have self-governing machines
where the processors or memory is not physically shared but the resources like
databases and printers are shared. The system is divided into various parts: the
back end and the front end. The section of the application that is used by the users
to interact and determine the information which is being explained and the process of
organizing it is known as the front end. The sorting and finding of the requested
information and running it on a central computer at some other location is known as
the back end. It is also known as the client-server architecture as the functioning of
the applications has been split up over individual computers. A type of distributed
computer system is the grid computing which is based on distributed architecture
and involves large quantities of physically connected computers to resolve problems.
The personal computers run individual tasks on the grid model and are linked loosely

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by using the low-speed networks. It makes use of several personal computers to
download and search for data of radio telescope. Traditional applications are used
for the running of the standalone applications over a single system whereas
distributed applications are used to run on multiple systems at the same time. The
maintenance of traditional applications is hard as they require installation on every
system. On the other hand, in case of a breakdown of a workstation, the work can be
resumed on another workstation as they are on the distributed computing system.
The low cost and absolute performance associated has helped to increase the speed
and increased reliability than a system that is not distributed. The trend of these
computing systems has been growing and most companies are converting to it
(Alam, Pandey and Rautaray 2015). The Distributed Computing Environment
supports services by the third party to offer generalized services which fit into the
system.
In the centralized system of computing, the personal computers of the client
are connected directly to the central server. The personal computer of the client is a
thin client having very limited or no computing capacity (Campbell-Kelly 2018). They
have primary input devices, weak CPU that has capabilities of networking and a
visual display. The central server does the processing of the computations and
compilations. The central server is installed with vast computing resources, primary
applications, high level computing-intensive features and storage. The nodes of a
client are dependent on the server for internet access, security, computing and
application access. Whenever any update has to be done, there is no need to update
each system separately. Only the updating of the central server will help to do the
update the entire system. The infrastructure of client nodes is managed by the
administrator from the primary interface. The vertical scaling of this system can be
done. However, it has a drawback of dependent failure of its components. A
breakdown of the central node fails in the entire system. After a specific limit, the
increase in the software and hardware capabilities of the node will not improve the
performance. There can be a situation of high traffic as the number of ports that can
be connected to the server is finite.
Conclusion
The company has a well-managed internal control system with proper
distribution of duties to its respective members. The books are maintained by the
manual recording of transactions. The situations of fraud have been highlighted. The
installation of distributed computing over centralized computing has been
emphasized.

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