CHAPTER 2 Flashcards
Discuss the ways in which information systems enable cross-functional business processes and business processes for a single functional area.
A business process is an ongoing collection of related activities that produce a product or a service of value to the organization, its business partners, and its customers.
Examples of business processes in the functional areas are managing accounts payable, managing accounts receivable, managing after-sale customer follow-up, managing bills of materials, managing manufacturing change orders, applying disability policies, hiring employees, training computer users and staff, and applying Internet use policy.
The procurement and fulfillment processes are examples of cross-functional business processes.
Differentiate between business process reengineering, business process improvement, and business process management.
Business process reengineering (BPR) is a radical redesign of business processes that is intended to improve the efficiency and effectiveness of an organization’s business processes.
The key to BPR is for enterprises to examine their business processes from a “clean sheet” perspective and then determine how they can best reconstruct those processes to improve their business functions.
Because BPR proved difficult to implement, organizations have turned to business process management.
Business process management (BPM) is a management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.
Identify effective IT responses to different kinds of business pressures.
Market pressures: An example of a market pressure is powerful customers. Customer relationship management is an effective IT response that helps companies achieve customer intimacy.
Technology pressures: An example of a technology pressure is information overload. Search engines and business intelligence applications enable managers to access, navigate, and use vast amounts of information.
Societal/political/legal pressures: An example of a societal/political/legal pressure is social responsibility, such as the state of the physical environment. Green IT is one response that is intended to improve the environment.
What are Porter’s five competitive forces?
The threat of entry of new competitors: For most firms, the Web increases the threat that new competitors will enter the market by reducing traditional barriers to entry.
Frequently, competitors need only to set up a website to enter a market. The Web can also increase barriers to entry, as when customers come to expect a nontrivial capability from their suppliers.
The bargaining power of suppliers: The Web enables buyers to find alternative suppliers and to compare prices more easily, thereby reducing suppliers’ bargaining power. From a different perspective, as companies use the Web to integrate their supply chains, participating suppliers can lock in customers, thereby increasing suppliers’ bargaining power.
The bargaining power of customers (buyers): The Web provides customers with incredible choices for products and information about those choices. As a result, the Web increases buyer power. However, companies can implement loyalty programs in which they use the Web to monitor the activities of millions of customers. Such programs reduce buyer power.
The threat of substitute products or services: New technologies rapidly create substitute products, and the Web makes information about these products available almost instantly. As a result, industries (particularly information-based industries) are in great danger from substitutes (e.g., music, books, newspapers, magazines, and software).
However, the Web can also enable a company to build in switching costs, so it will cost customers time or money to switch from your company to a competitor.
The rivalry among existing firms in the industry: In the past, proprietary information systems provided a strategic advantage for firms in highly competitive industries. The visibility of Internet applications on the Web makes proprietary systems more difficult to keep secret. Therefore, the Web makes strategic advantage more short-lived.
Describe the strategies that organizations typically adopt to counter Porter’s five competitive forces.
The five strategies are as follows:
Cost leadership strategy—Produce products and services at the lowest cost in the industry.
Differentiation strategy—Offer different products, services, or product features.
Innovation strategy—Introduce new products and services, put new features in existing products and services, or develop new ways to produce them.
Operational effectiveness strategy—Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals.
Customer orientation strategy—Concentrate on making customers happy.
business environment
The combination of social, legal, economic, physical, and political factors in which businesses conduct their operations.
business–information technology alignment
The tight integration of the IT function with the strategy, mission, and goals of the organization.
business process
A collection of related activities that create a product or a service of value to the organization, its business partners, and its customers.
business process management (BPM)
A management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.
business process reengineering (BPR)
A radical redesign of a business process that improves its efficiency and effectiveness, often by beginning with a “clean sheet” (i.e., from scratch).
competitive advantage
An advantage over competitors in some measure such as cost, quality, or speed; leads to control of a market and to larger-than-average profits.
competitive forces model
A business framework devised by Michael Porter that analyzes competitiveness by recognizing five major forces that could endanger a company’s position.
cross-functional processes
Processes for which no single functional area is responsible for executing.
digital divide
The gap between those who have access to information and communications technology and those who do not.
entry barrier
Product or service feature that customers expect from organizations in a certain industry; an organization trying to enter this market must provide this product or service at a minimum to be able to compete.
