HI5019: Strategic Information Systems - Rainbow Illusions Case Study

This report analyzes the Rainbow Illusions case study, focusing on its strengths in managing sales transactions, the problems it avoids by incorporating these strengths, and situational pressures that could lead to fraud. It identifies the advantages of distributed computing systems over centralized systems for the business. The analysis covers transaction cycles, financial and management reporting systems, and e-commerce aspects. The report also explores risks inherent in computer-based systems, including e-commerce, the role of ethics, and internal control processes. It highlights opportunities for computer fraud and security measures. The strengths identified include full-time managers, energetic employees, hourly wage structures, and the use of unsophisticated cash registers. The report discusses how these strengths address issues like slow queue management and excessive operational costs. It also examines factors like financial pressures, employee treatment, and external market conditions that could contribute to fraudulent activities. Finally, the report explains the benefits of a distributed system in terms of reliability, cost-effectiveness, and responsiveness.

Running head: STRATEGIC INFORMATION SYSTEM
STRATEGIC INFORMATION SYSTEM
Student’s Name
University Name
Author note

Executive summary
The purpose of this report is to analyze Rainbow Illusions in the case situation and identify the
strengths of the company. The report determines the ways in which the strengths of the business
organization can overcome the problems that can be faced by the business organization. Further,
it analyzes the two situations that can be faced by the company which leads to fraudulent
activities within the business organization. It explains the situations which can lead to such
problems and lower the profitability and performance of the business organization. The report
also analyzes the reason for which the distributed computing systems are preferred over the
centralized computing systems. Lastly it summarizes the main points of the report and concludes
the report.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Strengths of Rainbow Illusions for controlling sales transaction....................................................3
Problems avoided by incorporating the strengths............................................................................5
Situational pressures that might lead to Fraud.................................................................................7
Rationale for installing distributed computer system rather than centralized.................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

Introduction
The revenue cycles of various business organization or retail stores are considered to be
the primary source of revenue which is generated from the sale of goods and services. The
business organizations need to maintain the effectiveness of the credit sales and receivables so as
to avoid excessive costs and avoid further harm to the company. There are various internal
controls which guides the business organization to evaluate and design the process of transaction.
It involves authorization, delegation of duties, supervising, verifying, controlling and accounting
the records (Gentry et al. 2013). The report analyzes and evaluates the process, risks and internal
controls for the revenue cycles for the organization Rainbow Illusion. The report identifies the
strengths for controlling the sales transaction of the business organization. It analyzes the
problems that can be faced by the company and can be addressed incorporating the strengths in
the systems of controlling the sales transaction of the business organization. Further, it identifies
the situational pressures that can increase the chances of fraud. Lastly, it analyzes the reasons
why distributed computer systems are preferred over the centralized computer systems.
Discussion
Strengths of Rainbow Illusions for controlling sales transaction
The system for managing and controlling the sales transaction are the strengths in
Rainbow Illusions. The business organization has full time managers along with an assistant
manager, who are paid salary; this is one of the strength of the business organization. The full
time manager and assistant manger manages the organization and supervises the other employees
efficiently (Jenkins and Williamson 2015). The young and energetic cashiers and sales persons

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present in the retail business store is also strength of the company. The cashiers and the sales
person of the retail business are highly enthusiastic and energetic because of their young age.
Moreover, they are working part time; this reduces the cost of operations of the retail business
unit. The cashiers and the sales persons are paid wages on hourly basis along with commission
and incentives based on the volume of sales sold to the customers (Erhemjamts and
Venkateswaran 2013). This reduces the operation cost and the extra expenditure of the retail
business organization. The sales person and the other cashiers are paid for the actual hours
worked. The compensation provided to the sales person and the cashiers of the retail business
unit enables the workers and the sales person to maintain their quality and increase sales for the
company. Moreover, the hourly wage workers can be hired only when needed rather than having
complicated contracts and salary. Therefore, it saves the cost of the company and it does not owe
to complicated obligations such as pension, gratuity and other types of incentives. However,
commissions are provided to the employees for motivating them to increase the sales volume
(Dubreuil, Forest and Courcy 2014). Further, the retail business unit uses unsophisticated cash
registers having four part sales invoices for recording the transactions of the business
organization. The sales personnel send the sales invoice to the cashier, who then reviews the
order placed and input the transaction. The sales returns are managed in just the opposite way.
The assistant manager of the business organization prepares a daily reconciliation report. The
data process is returns the weekly sales and reports to the manager for further review. The
manager and the assistant mangers review the cash, credit and prepare the daily bank deposit and
validate deposit slip. This reduces the slow queue management (Neubauer and Lank 2016). The
cash transaction procedure implemented by the business organization reduces complexity and
delivers quick service to the customer without any delay. Further, it has been analyzed as per the

situation; Rainbow Illusions have implemented distributed system for transaction. This can be
advantageous for the business organization (Follett 2013). This increases reliability and ready
availability. This is comparatively more economical as the information and data regarding the
transaction are distributed among the other workers and cashiers. It enables the business
organization to respond quickly and in closer proximity to the place where it is most needed. The
transactions are securely managers with the help to distributed data. It ensures more transparency
and replication in the whole sales transaction process (Smith 2017). This system of secure
transaction helps the retail business organization to improve the performance and parallelism in
executing transactions.
Problems avoided by incorporating the strengths
It has been identified that the young and energetic employees in the workplace enable the
business organization to avoid the problem of slow queue management. The hourly basis wage
method implemented by the retail business organization overcomes the problem of excessive
expenditure and cost of operation (Goss 2015). The hourly wage and compensation provided to
the sales personnel’s and the workers of the retail business organization helps to ensures
efficiency and reduces the problems of labor absenteeism and avoidance of work. The hourly
wage system in the retail business organization also promotes healthy competition. Salary system
would have increased the cost structure and decreased the profitability of the retail business
organization. The transaction system implemented by the Rainbow Illusions helps the business
organization to reduce excessive cost to the business organization and it also avoids the problems
of slow queue management (Heald 2018). This enables the business organization to overcome
the problem the slow service offering to the customers. The sales transaction processing system

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in the business organization helps to achieve customer satisfaction and customer loyalty. The
young and energetic workforce and sales personnel in the business organization reduces the
problem of slow transaction process. They provide a better transaction process and thereby
ensure satisfied customers (Tian and Peterson 2016). The customers in the queue are provided
with quick service as the sales personnel are young and energetic. Moreover, the business
organization utilizes unsophisticated cash registers having four part sales invoice for recording
the transactions, this helps the retail business organization to avoid any sort of problem regarding
training and development programs’ for the new employees and the new sales personnel’s.
Additionally this reduces the problem of gathering materials and resources for offering training
and development facilities (Wortley and Summers 2013). The continuous availability of the
managers and the assistant managers of the organization reduces the problem of delayed return
slips and delay in preparing the reconciliation report. The efficient transaction processing system
in Rainbow Illusions reduces the workflow issues and problems as it implements the processes
and tools for efficient handling of transactions. Further, the department for data processing
returns the weekly sales and commission activity report which is reviewed by the manager. The
managers analyze the revenue cycle management while tracing the errors and issues. The
managers while reviewing are able to figure out the areas in which the activities and the
workflow are not in the right direction (Smallbone and Cale 2016). This reduces the problem of
overlooking the minor issues in the organization which can adversely affect the business
organization. The managers of the business organization can consider reorganizing the things
after reviewing and identifying the issues. They can manage the workforce and the resources of
the business organization as per the needs and requirements. The distributed transaction system
implemented by the business organization reduces the problem of reorder records and helps the

business organization to process the reorder records in an efficient manner (Dyck, Morse and
Zingales 2013). The control systems implemented by Rainbow Illusions reduce the problems of
communication and data transfers. These are some of the strengths of the business organization
which helps to address the problems.
Situational pressures that might lead to Fraud
There are various personal and professional reasons which can lead to fraudulent activities in the
organization. Following are the two situations pressures which increases the chances of fraud:
a) The financial pressures of the business organization such as heavy investments and losses,
situation of insufficient working capital and its inability to acquire credit can lead to fraudulent
activities.
b) Rise in the perception of the employees being unfairly treated or inadequate treatments by the
business organization, resentment among the senior employees or senior sales executives and
extreme community pressures can lead to fraudulent activities in the business organization.
There might be certain situations in the external business, where the demand for ready to
wear clothes for the young female are decreased or rise in competition in the market. This might
increase the level of tension in the internal business environment as the company is only
dependent on fewer products and services that are female readymade clothes (Dyck, Morse and
Zingales 2013). The external business environment is rapidly changing and there are increased
levels of competition in the market. Moreover, Rainbow Illusions are only dependent on few
target customers that is young female. This can led to crisis situations in the business

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organization. Since the employees and the staffs of the organization to providing hourly wages,
the management might consider reducing the time of working for the employees and the staffs in
order to overcome the revenue deficit (Dyck, Morse and Zingales 2013). This might increase
tension and conflicts in the organization thereby leading to fraudulent activities. The extreme
long process of revenue cycle of the business organization increase complexity. The economic
situations prevailing in the external business environment such as unfavorable economic
conditions within the clothing industry can raise the problems and issues and led to fraudulent
activities. Increase in the levels of competition in the market can reduce the profitability of the
business organization (Huber et al. 2015). This can reduce the sales backlog and pressurize the
business organization to merge or reduce the price of the products and services offered to the
consumers. This in turn affects the employees and decreases the working capital of the business
organization. These economic situations in the business organization might increase inventory in
the organization without sufficient increase in the sales volume (Huber et al. 2015). These are
some of the economic conditions which might directly or indirectly lead to frauds in the
organization.
The lack of employee morale in the business organization, lack of string code of ethics
can increase the chances of fraudulent activities in the business organization. The lack of
stability among the employees associated with career plateauing, aging, promotional stagnation
and a string desire to beat the system can increase the chances of fraudulent activities in the
organization. The failure of the business organization to inform the employees about the rules
and legislations about fraud perpetration, increase in labor turnover, and absence of explicit
personnel policies can increase the chances of fraudulent activities. The hourly wage system and
other limitations of the business organization can cause employee dissatisfaction which in turn

can increase the chances of frauds (Huber et al. 2015). Moreover, unethical management and
dishonest practices of the management can also lead to frauds. Lack of internal security and too
must trust placed on the employees can also lead to frauds.
Rationale for installing distributed computer system rather than centralized
Distributed computing systems have a real impact on the operational activities of the
company. The distributed computing systems help to solve various challenges which are posed
by the centralized computing systems. Therefore, many companies considered installing a
distributed computer systems rather than a centralized one (Shen et al. 2013). The centralized
computing systems are highly ineffective and expensive due to the increased amount of data and
workload. The centralized computing system controls huge amount of data and computations
tales place at the same time. This strains the computing system and it therefore leads to chances
of system break down and failure. Centralize computing systems are not capable for processing
huge among of transactional data. Hence one of the big issues with centralized systems is
reliability (Henseler et al. 2013). The transactional data is lost permanently if the centralized
system’s server fails. Therefore, distributed computing is preferred by many companies rather
than centralized systems of computing.
Distributed computing systems comprises of group of systems in various locations
connected over a network. It works on one particular goal or objectives. These computing
systems offer a better performance as compared to the centralized computing systems. Moreover,
the distributed computing systems provide greater agility as compared to the centralized
computing systems (Shen et al. 2013). The major purpose for installing distributed computing
systems is that the business organization has the facility to add and alter the software and the
computational power as per the changes in the needs and the demands of the business. With the

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increase in the price of computing systems, the business organizations have been using
distributed systems and other service-oriented architectures such as micro services. The IaaS that
is the Infrastructure as a service enables the distributed systems to be accessible for various
business organizations by allowing them to host their infrastructure internal or through a public
cloud. These enable the business organization to take control over the operating systems and
provide a platform which helps the business organization to form a foundation of their software
infrastructure (Shen et al. 2013). Therefore in the context of a distributed system, it reduces the
workload and work pressure of the business organizations. It helps the business organizations to
reduce complexity and cost of the company.
The centralized computing system is highly dependent on network connectivity since
there is only one single node. There is no degradation of system; it leads to failure of the entire
computing system. Moreover it is difficult to maintain the server. On the other hand, the
distributed computing system relies on external cloud service and provides complete control on
the system architecture (Carlen et al. 2017). The decisions taken by the business organizations
are entirely based on the needs and demands of the business organization and the way in which it
works. Therefore it can be said that distributed computing system brings agility to the business
organization. It helps to improve the absolute performance of the business organization. The
tasks and the operations are divided into sub computation which is run concurrently (Henseler et
al. 2013). Henceforth it speeds up the process of completing and executing the tasks. It reduces
the time and boosts the performance of the systems.

Conclusion
Therefore from the above analysis, it can be concluded that Rainbow Illusion has many
strengths which helps to avoid many problems that can be faced by the business organization.
The company incorporates the strengths to avoid the problems. The business organization has
young and energetic sales personnel’s and cashiers who work part time and are paid wages on
hourly basis. This helps the business organization to overcome the problem of excessive
operational cost and expenditure. The young and energetic employees carry out the operations in
an efficient manner. The compensation and incentives paid to the employees on the basis of sales
volume induces the employees to increase their efficiency and boost productivity in terms of
sales volume. This helps the business to achieve the sales goals and targets. The transaction
control system of the business organization enables the business to carry out the operations
smoothly and timely. This reduces the problem of slow queue in the organization. It saves time
for both the organization and the customers. The report has identified the two situational
pressures that can take place in the business organization in order to increase the likelihood of
fraud. Further the report has analyzed the reasons for installing a distributed computer system
rather than a centralized computing system by many business organizations.