Changing Structure and Shape of Finance Flashcards
What is outsourcing?
The contracting out of all or part of a business operation to an external organisation.
What is one advantage of outsourcing?
Can help keep costs down and improve quality.
What is one disadvantage of outsourcing?
Can lead to a lack of control over external providers.
Define business process outsourcing (BPO).
The outsourcing of a specific business process such as payroll or HR.
What are core competencies in relation to outsourcing?
Competencies essential to maintaining competitive advantage that should never be outsourced.
What are threshold competencies?
Competencies essential for operation but not key for competitive advantage, often good candidates for outsourcing.
What are complementary competencies?
Competencies that can be outsourced but require expertise and trust in the provider.
What are residual competencies?
Simple competencies that can be easily outsourced without the need for long-term relationships.
What is a service level agreement (SLA)?
A document that sets out the terms of the relationship between the outsourcing company and the organisation.
What does transaction cost theory relate to?
The decision to employ people versus outsourcing activities, considering costs beyond the contract fee.
What are transaction costs?
Costs incurred in addition to the contract fee, such as negotiation and monitoring costs.
What is asset specificity?
The degree to which an asset is specific to a particular area of work.
What is bounded rationality?
The concept that decision-making is limited by time constraints, cognitive capacity, and available information.
Define offshoring.
The relocation of a business process to a different country, often to reduce costs.
What is near-shoring?
Offshoring to a nearby country, often sharing a border with the original country.
What is reconfiguration in the context of finance?
Changing the structure and organisation of the finance department.
What is a shared service centre?
A provision of a service by one part of an organisation that was previously found in multiple parts.
What is business process re-engineering (BPR)?
The analysis and design of business processes to fundamentally rethink how organisations operate for dramatic improvements.
Fill in the blank: The roles of the finance function can be classified under two headings, _______ and transformational.
transactional
What is one advantage of creating a shared service centre?
Lower costs due to consolidation.
What is one disadvantage of a shared service centre?
May lack knowledge of local business needs.
What is business process re-engineering (BPR)?
The analysis and design of business processes to fundamentally rethink how organisations operate for dramatic improvements in performance.
List the key aims of business process re-engineering.
- 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
What impact can the implementation of new processes from BPR have?
Significant impact on staff and the organisational structure.
