Changing Structure and Shape of Finance

Question 1

What is outsourcing?

Answer 1

The contracting out of all or part of a business operation to an external organisation.

Question 2

What is one advantage of outsourcing?

Answer 2

Can help keep costs down and improve quality.

Question 3

What is one disadvantage of outsourcing?

Answer 3

Can lead to a lack of control over external providers.

Question 4

Define business process outsourcing (BPO).

Answer 4

The outsourcing of a specific business process such as payroll or HR.

Question 5

What are core competencies in relation to outsourcing?

Answer 5

Competencies essential to maintaining competitive advantage that should never be outsourced.

Question 6

What are threshold competencies?

Answer 6

Competencies essential for operation but not key for competitive advantage, often good candidates for outsourcing.

Question 7

What are complementary competencies?

Answer 7

Competencies that can be outsourced but require expertise and trust in the provider.

Question 8

What are residual competencies?

Answer 8

Simple competencies that can be easily outsourced without the need for long-term relationships.

Question 9

What is a service level agreement (SLA)?

Answer 9

A document that sets out the terms of the relationship between the outsourcing company and the organisation.

Question 10

What does transaction cost theory relate to?

Answer 10

The decision to employ people versus outsourcing activities, considering costs beyond the contract fee.

Question 11

What are transaction costs?

Answer 11

Costs incurred in addition to the contract fee, such as negotiation and monitoring costs.

Question 12

What is asset specificity?

Answer 12

The degree to which an asset is specific to a particular area of work.

Question 13

What is bounded rationality?

Answer 13

The concept that decision-making is limited by time constraints, cognitive capacity, and available information.

Question 14

Define offshoring.

Answer 14

The relocation of a business process to a different country, often to reduce costs.

Question 15

What is near-shoring?

Answer 15

Offshoring to a nearby country, often sharing a border with the original country.

Question 16

What is reconfiguration in the context of finance?

Answer 16

Changing the structure and organisation of the finance department.

Question 17

What is a shared service centre?

Answer 17

A provision of a service by one part of an organisation that was previously found in multiple parts.

Question 18

What is business process re-engineering (BPR)?

Answer 18

The analysis and design of business processes to fundamentally rethink how organisations operate for dramatic improvements.

Question 19

Fill in the blank: The roles of the finance function can be classified under two headings, _______ and transformational.

Answer 19

transactional

Question 20

What is one advantage of creating a shared service centre?

Answer 20

Lower costs due to consolidation.

Question 21

What is one disadvantage of a shared service centre?

Answer 21

May lack knowledge of local business needs.

Question 22

What is business process re-engineering (BPR)?

Answer 22

The analysis and design of business processes to fundamentally rethink how organisations operate for dramatic improvements in performance.

Question 23

List the key aims of business process re-engineering.

Answer 23

• Automate the process to keep costs down
• Improve the speed of the process
• Improve the quality of information produced
• Reduce errors and produce more accurate information
• Ensure better compliance with law and regulation

Question 24

What impact can the implementation of new processes from BPR have?

Answer 24

Significant impact on staff and the organisational structure.

Question 25

What has driven the need for re-engineering in business processes?

Answer 25

The continuing development and deployment of sophisticated information systems.

Question 26

True or False: BPR is often a cost-effective exercise.

Answer 26

False.

Question 27

What is a potential long-term benefit of implementing BPR despite initial costs?

Answer 27

Achieving long-term savings through increased efficiency.

Question 28

Define business process automation.

Answer 28

The transferring of tasks previously done by humans to computers.

Question 29

What are the two types of business process automation?

Answer 29

• Traditional process automation
• Modern process automation

Question 30

What characterizes traditional process automation?

Answer 30

Automation of simple repetitive tasks originally done by hand.

Question 31

Give an example of modern process automation.

Answer 31

Software used in recruitment that employs AI to scan résumés and optimize the screening process.

Question 32

How is business process automation becoming increasingly important to the finance function?

Answer 32

As technology of the Fourth Industrial Revolution develops, more complex processes can be automated.

Question 33

Fill in the blank: BPR can lead to improvements in __________, __________, and __________ of information.

Answer 33

[speed], [quality], [accuracy]

Question 34

What is a potential benefit of automating the recruitment process?

Answer 34

Saves money and time, allowing for more candidates to be screened.

Question 35

What is an example of a task that can be automated in business process automation?

Answer 35

Sending confirmation emails after a purchase.

Question 36

True or False: Modern process automation only applies to finance functions.

Answer 36

False.

Question 37

What could be a dramatic change in finance processes due to BPR?

Answer 37

Changes in payroll, receivables, payables, credit control, financial accounts production, and tax processes.

Question 38

What is the ultimate goal of designing the optimum process in BPR?

Answer 38

To achieve the business’s objectives.