Strategic Information Systems Case Study: Rainbow Illusion

This case study analyzes the strategic information systems of Rainbow Illusion, a company with 30 retail stores selling readymade garments. The report examines the company's transaction cycles, financial reporting, and management reporting systems. It explores the risks associated with computer-based systems, including e-commerce, and the importance of internal controls to mitigate these risks. The analysis highlights six strengths of Rainbow Illusion in controlling sales transactions and addresses potential fraud scenarios like credit card fraud and merchandise theft. The study also discusses the benefits of a decentralized control system compared to a centralized one, offering insights into how Rainbow Illusion can optimize its information systems for business and enterprise.

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:

1STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
Executive Summary
In this report the process, risk and internal control of the Rainbow Illusion Company are
discussed. It states about the six strength of the company and how these strength have
avoided the problems in controlling sales transaction. It states about the two situation in
a company which increases the probability of fraud. And at last this report included why
companies would choose decentralize control system compare to the centralized ones.

2STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
Table of Contents
INTRODUCTION...............................................................................................................3
DISCUSSION.....................................................................................................................4
Six strength of Rainbow Illusion................................................................................5
Problems avoided by incorporating the six strength..............................................6
Two situational pressure which increase the probability of fraud.........................8
Choosing Decentralized Control System compare to Centralized one’s..............9
CONCLUSION.................................................................................................................10
REFERENCE LIST..........................................................................................................12

3STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
INTRODUCTION
Information System Technology is essential today for every business in world. In
simple words it help corporates and organization to store, process, allocate the data
which they developed and receive. It basically comes with analytical tools and data
which help organization to find solutions and opportunities for business (Nofal and
Yusof 2013). In other words it enhances the organization way of doing business for the
betterment of the company’s future. It come with tactics tools which help in to find
solution and cope up with such changing world in corporate environment. There are
basically three types of information system strategies like Transaction Processing
System, Enterprise Collaboration System, and Process Control System. Rainbow
Illusion having 30 chain store at New South Wales and Victoria which sells readymade
clothes for young females. And each of the 30 store have a full time manager and
assistant manager who are generally experience person in their field. Stores have
young people for cash counter and sales team for handling the sales department. It
discussed about six strength for controlling sales transaction, the problem which
avoided by the Rainbow Illusion, the situation which can create fraud in a company, and
explanation of why some companies will choose to install Distributed computer system
compare to the central ones (Belfo and Trigo 2013). And at last it included the
conclusion of all discussion to state the view for the Rainbow Illusion.

4STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
DISCUSSION
Rainbow Illusion corporates 30 chain store selling readymade garment for young
females, it have Centralized computer system for running and controlling the business.
At first process, the developing of product take place when product must present at
saleable place, for which firm can use own resources or create the product from outside
source (Jones etal. 2014). At second process, the Rainbow Illusion has to store this
items until they ready to go for the next step in which warehousing comes in practice.
Warehousing controller manages all the product until it reach to distribution to different
retail outlet. At third process, process distributors are involved who moves readymade
garments from warehouse to different stores. At fourth process, readymade garment
reach the stores where buyer picks the product. Store Manager ensures of the correct
item are kept in counter to meet customers demand. Manager have to make sure of
minimum level of product are able in counter before it get clear. The common risk
involved in revenue cycle is the accuracy of sales contracts. Rainbow Illusion have to
ensure that correct price mentioned at particular product (Ogiela 2015). Rainbow illusion
have to keep eye on sales orders, sales price, and terms regulated by government to
smoothly run the store. Review of credit facility is required as an unaccepted risk may
occur which can cause loss or bring bad impact to Rainbow Illusion. As if Rainbow
Illusion provide facility of home delivery of product so in such case extra care is need to
ensure, product do not get deliver to the wrong person or the wrong product or quantity.
There is a risk whether goods are correctly billed or not at first time or at time of
exchange. There can be a situation where product is sold out but the record is not done.

5STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
And at worse to worse there can be a risk of sales book lost. But such risk can be
control by taking care of few things consider as to take care of all credit related matters,
keeping record of all issued credit, sales should be recorded at appropriate period,
policies are carefully made after looking all business existence and economic condition,
cash register should be maintain on daily basis and authorize person only allowed to
record the transaction (Mettler and Winter 2016).
Six strength of Rainbow Illusion
The six strength of Rainbow Illusion for controlling sales transaction system are:
 Established Responsibility - This strength plays an important role in Rainbow
Illusion Company as there should be a plan before executing the work (Sun,
Strang and Firmin 2017). In such process, the responsibility are given to
employee after looking to their knowledge and skill which will motivate the
employees.
 Maintenance of record – This strength is very important for any business to keep
track of all its business transition for necessary documentation to use in business
and audit process.
 Taking care of its Employees – In this Rainbow Illusion make sure that every
employee feel happy for being part of the company. Company assure to giving
proper pay to its employee for job like its manager or assistant manager who
receives fix salary or the selling staff who get pay in hourly basis.
 Employee rotation – This is also very crucial strength for Rainbow Illusion as it
make sure of having very less fraud from the side of employee. If an employee

6STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
only keep doing same task may find a way to cheat or also may get demotivated,
so by applying employee rotation employee and owner both get beneficial
(Nikpay etal. 2013).
 Splitting of responsibility – As Rainbow Illusion has spilled the responsibility
between manager, assistant manager, cashier, sells staff, etc. In such manager
have to look all over the store, assistant manager have to get the work done by
other lower subordinate as per the manager’s plan, and rest other staff have to
perform their individual task by such all stores can work efficiently.
 Control over the technology – As today technology have developed so much that
it been part of all kind of business (Mathrani, Mathrani and Viehland 2013).
Rainbow Illusion have make sure to control over the technology by adapting and
complying with new way of running the store.
 Performing independent review on daily basis – Store manager have to look
each work but having an review on daily basis make sure of things going perfect
as per the plan. In this way Rainbow Illusion can keep track of its performance
and solve the minor problem before it get major.
Problems avoided by incorporating the six strength
Established Responsibility basically means a duty that one must fulfill or perform
task which have penalty for failure (Galliers and Leidner 2014). In this way establishing
responsibility is very important as by implementing the established responsibility the
Rainbow Illusion have right person at right job. For instance if a role of manager is given
to cashier or selling staff of store than it will simply have drastic impact. Maintenance of

7STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
record is one of the strength for better internal control over the sales transaction. By
implementing proper maintenance of record ensure that whatever event took placed it
have record of such, in this way Rainbow Illusion find better fast solution and can also
make efficient plan as per it. By taking care of its key employees, states that with
employees have a bond or insurance in which Rainbow Illusion which guarantee to pay
in case of uncertainty event like death or accident (Ha and Ahn 2014). In this Rainbow
Illusion have avoided maximum level of employee’s turnover over which will give benefit
for long term. Splitting of responsibility mean dividing the work among employees so
that one person does not perform three person job. By implementing such strength
Rainbow Illusion can have better work environment and highly motivated employees
and prevention of fraud and error can be control. By Control over the technology
Rainbow Illusion have avoided uncompleted and inaccurate processing of data as today
we live in a world of changing technology where control over such becomes important
(Cassidy 2016). Performing independent review on daily basis is one of the main
strength for Rainbow Illusion as by such it avoided many uncertain events which can
become big issue in future. This will keep a track record of stock, where exceeding or
falling behind the minimum requires level as in case happening of either two could
seriously affect the Rainbow Illusion.
Two situational pressure which increase the probability of fraud

8STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
There are some situational pressure in a company like Rainbow Illusion which
can increase the probability of fraud like Credit Card Fraud, Merchandise Theft, etc.
Credit Card Fraud is one of the most common fraud scheme practice. Business owner
should be aware of such fraud as this can damage the business drastically or can
impact upon the reputation in market. In such fraud basically two things happens, at first
the customer’s credit card information is get collected by employee at store and then the
employee use card information to show false sales or send free gifts to themselves. And
the customer cannot even fonder how it took place (Tamm etal. 2015). Basically such
practice take place where work pressure is high and regular customers are common. It
is common where customer visit many a times after they start ignoring bill charges, and
they simply never look to it or look it at end of the month. On other side employee will
keep practicing this with few customer too to avoid any doubt (Ulmer, Belaud and Le
2013). Though this can be prevent if there is a locked system which will not allow
employee to look over the information of customer. It can also be reduce by having
camera at back of the register maintain place, in such if at time of no customer or just
few and written statement where still continue for long this may raise question and
recheck will clear the doubt. Merchandise Theft is also most common practice of fraud.
In retail chain stores it is very common that an employee performing different activities
work. For instance there may be situation where employee is responsible for checking
out customer and also by the time the same employee only responsible for pricing,
opening new packages at the first place (Tambo and Bækgaard 2013). In such there
comes an opportunity for employee to fraud but generally it’s not possible in big
companies comparing to the small ones. Smart employee in such practice create a

9STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
fictitious situation in which making to show that its fault of vendor. For example if 100
dresses are delivered to a store from warehouse and at time of tagging the price,
manager may misses the 2 dresses to tag but at time of recheck manager may say that
all dresses where tagged. As in business of retail chain stores maintaining and checking
of inventory is poor which create opportunity for employees (Popovič etal. 2014). In
many stores the Manager and Assistant manager are more attentive at front greeting to
the customers compare to counting stocks at basement, in such if employee find
negligence in control than the employee can easily come and out from the stock room
and practice such fraud. But though this can be control too by having camera in
stockroom areas and it can also be control by having sudden checking of products
without announcement as the merchandise thief will be very aware and before
performing such practice may find in trouble (Wu, Straub and Liang 2015). Such two
practice discuss above are very common and important for company like Rainbow
Illusion as if these are been ignored for long can damage the business.
Choosing Decentralized Control System compare to Centralized one’s
Every companies are aware of different system available in market like
Distributed Computer System, Centralized Computer System to choose for their
business. But there is confusion between choosing one of them (Sun, Strang and
Yearwood 2014). Centralized computer system is a system where there is one serve
and a client, it is most commonly used method which directly connects to the central
server in which company receive signal in server directly provided by client. An example
for centralized computer system is Network File System which actually hold and host all

10STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
file system. The concept of this system is that its clients are very much dependent on
network file system whose request are not processed locally which comes on client
machine. And the machine of client is strongly coupled where all the files are
processed. Thus, it have many disadvantages like if the masters system gets failed than
its clients are no longer to process any request. In this model it is simple and straight as
there is only one server machine but if it out of service than the whole process will get
stop. Whereas Decentralizes computer system which is very popular system currently in
market in this own decision are taken by each nodes. But as Decentralize system
control is the modern technique of controlling system and this been mostly preferred by
companies Like Rainbow Illusion because many different reasons (Rainer etal. 2013).
For example in such system data is stored in different nodes and the request of client
can come to any nodes which helps it running smoothly, such feature is not available in
centralized control system and so there is no point of single failure. The most beneficial
advantage of decentralized system control is that it allow to work offline and come with
great flexibility. It is really faster compare to centralized system control as there is no
requirement to connect with remote server for each command. As companies like
Rainbow Illusion which have different branches in such decentralized system control
makes work easy whereas in case of centralized control system it is really time
consuming (Vom Brocke and Rosemann 2014). The crucial point which make it
preferable compare to centralized control system is that if the main server goes down or
get crash there still the backup file can be get where the current version is fully saved
where such thing not available in central control system. There is less conflict between
different branches in case of have decentralized control system whereas there is always

11STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE.
conflict between branches in case of using centralized control system (Alaeddini and
Salekfard 2013). As per one of the survey it was found that decentralized control system
is more beneficial for company compare to centralized control system but there may
case depend upon the stage of company in which it lies but it cannot be deny that one’s
company start using decentralized control system it can look over for long term.
CONCLUSION
However now it can be conclude that Rainbow Illusion is managing the chain
store business well. The process flow of work in store are well design and managed at
each stage. The risk related to its revenue cycle is well adjusted by having proper
internal control which have control much of their risk. As having internal check on all its
product improve the efficiency level of the store. After identifying strength of Rainbow
Illusion it have improved in their business which will benefit for long run. This strength
are crucial for their business to run as store chain business have to keep efficiency level
high all time because of having high competition market. By applying those strength in
their business they have avoided many problem which was discussed above which
stated the business is going on right track just to maintain its momentum. After this two
situation have discussed which the most common reason for fraud this states how a
simple nigligency can impact the business drastically.