Managers continuously seek ways to improve productivity and reduce costs. Many manufacturers and retailers incur large costs to track inventory. To reduce these costs, managers began to consider the use of radio frequency identification (RFID) tags to replace bar codes that were currently used to track inventory receipt, movement, and sale. When embedded in individual products, RFID tags allow companies to use radio signals to track every product item. For retailers such as Wal-Mart, RFID technology was expected to not only reduce the cost of tracking inventory, but to also reduce losses from theft.
To further investigate the use of RFID, Wal-Mart and Procter & Gamble secretly launched a research project in a suburban Tulsa, Oklahoma, Wal-Mart store. Researchers monitored the movement of a particular lipstick product using RFID tags in the lipstick packaging, electronic readers concealed in the store shelves, and Webcams. A sign on the lipstick display informed customers about the use of closed-circuit television and electronic security at the store.
When news of the testing became publicly known, consumer advocacy groups raised alarms about the potential loss of privacy from RFID tags. They claimed that proliferation of RFID technology could eventually allow retailers to track their products after customers buy them and leave the store. These concerns prompted a California state senate subcommittee to hold public hearings on RFID. Similar actions were likely to be taken in other states.

REQUIRED
A. Would the information from RFID tags be considered internally or externally generated information? (See Exhibit 1.3.) Explain.
B. Information gathered by Wal-Mart from its in-store research on the RFID technology was most likely summarized in one or more internal reports. Were these internal reports most likely used to (1) support organizational strategies, (2) support operating plans, or (3) monitor and motivate? Explain.
C. Describe the business risk associated with Wal-Mart€™s decision to conduct research on its customers without explicitly informing them.
D. Provide arguments for and against Wal-Mart€™s decision to conduct research on its customers without explicitly informingthem.

Information Systems Information gathered from inside the organization (eg. actual operations and design specifications for a new product) Information gathered outside the organization (e.g, economic trends and customer preferences) Databases and software External Reporting Internal Reporting Support Organizational Strategies Shareholder Reports . Financial statements (GAAP, IFRS) e News relcases Capital budgets . Product development e Analysis of potential acquisitions Other Stakeholder Reports - Credit reports eInventory reports for suppliers Support Operating Plans Operating budget e Analysis of product mix . Cash flow plan Government Reports Tax returns . Cost reports (Medicare, defense Monitor and Motivate contractors, etc.) Regulatory reports (SEC, EPA, etc) * Actual versus planned pertormance . Bonus computations . Supplier quality