Chapter 2: Organizational Strategy, Competitive Advantage, and Information Systems Flashcards
Define Business process and the 3 fundamental elements
Business process: is an ongoing collection of related activities or tasks that in a specific sequence create a product or a service of value to the organization, its business partners, and its customers.
- The process involves three fundamental elements:
- Inputs: Materials, services, and information that flow through and are transformed as a result of process activities
- Resources: People and equipment that perform process activities
- Outputs: The product or a service created by the process
Business Processes: If the process involves a customer, then that customer can be either __ or __ to the organization.
give an example how a customer can be I____? or E___ ?
If the process involves a customer, then that customer can be either internal or external to the organization.
- A manager who is the recipient of an internal reporting process is an example of an internal customer.
- In contrast, an individual or a business that purchases the organization’s products is the external customer of the fulfilment process.
Two fundamental metrics that organizations employ in assessing their processes are ___ and ___:
effectiveness and efficiency
define effectiveness and efficiency, give example for both
Effectiveness focuses on doing the things that matter; that is, creating outputs of value to the business process customer
- Ex. in a manufacturing business process, effectiveness would be measured as making high-quality products, or in a sales business process effectiveness could be measured as an employee meeting the monthly sales quota.
Efficiency focuses on doing things without wasting resources;
- Ex. progressing from one process activity to another without delay or without wasting money.
define Cross-functional processes and how it relates to Procurement Process and Fulfilment Process?
Hint: procurement (purchasing of goods)
Cross-functional processes: meaning that no single functional area is responsible for their execution
- Many other business processes, such as procurement (obtaining or purchasing goods/services) and fulfilment (of orders), cut across multiple functional areas - called Cross-functional processes
define Procurement Process and explain how it comprises warehouse, purchasing, and accounting (example) and also define Fulfilment Process and give an example
Procurement Process: includes all of the tasks involved in acquiring needed materials externally from a vendor.
- Procurement comprises five steps that are completed in three different functional areas of the firm: warehouse, purchasing, and accounting.
Warehouse
1. The warehouse realizes it needs to get more materials because it’s running low. The warehouse makes a request for these materials and sends it to the purchasing department
2. Next, the purchasing department finds a suitable supplier, makes an official order based on the request, and sends it to the supplier
3. The supplier then ships the materials to the warehouse
4. Afterward, the supplier sends a bill, which is received by the accounting department
5. Finally, the accounting department pays the supplier, finishing the procurement process
Fulfilment Process: concerned with processing customer orders.
1. Fulfilment is triggered by a customer purchase order that is received by the sales department.
2. Sales then validates the purchase order and creates a sales order.
3. The sales order communicates data related to the order to other functional areas within the organization, and it tracks the progress of the order.
4. The warehouse prepares and sends the shipment to the customer. Once accounting is notified of the shipment, it creates an invoice and sends it to the customer.
5. The customer then makes a payment, which accounting records.
Michael Hammer and James Champy argued that to become more competitive, businesses needed to radically redesign their business processes to reduce costs and increase quality.
This radical redesign, called ______?
business process reengineering (BPR)
define Business Process Reengineering (BPR) and Business Process Improvement (BPI)
Business process reengineering (BPR): is a strategy for making an organization’s business processes more productive and profitable
- BPR is done to dramatically improve your business processes and potentially change the structure of your organization as a result.
Business Process Improvement (BPI):
businesses increasingly began to organize work around business processes rather than individual tasks. The result was a less radical, less disruptive, and more incremental approach
Although BPI initiatives do not deliver the huge performance gains promised by BPR, many organizations prefer them because they are less ___ and less ____
risky , costly
To sustain BPI efforts over time, organizations can adopt business process management (BPM), define BPM and state the components of BPM
Business process management (BPM): a management system that includes methods and tools to support the design, analysis, implementation, management, and continuous optimization of core business processes throughout the organization
Important components of BPM are process modelling and business activity monitoring:
- Process modelling: is a graphical depiction of all of the steps in a process — helps employees understand the interactions and dependencies among the people involved in the process, the information systems they rely on, and the information they require to optimally perform their tasks
Business activity monitoring (BAM): is a real-time approach for measuring and managing business processes.
- Companies use BAM to monitor their business processes, identify failures or exceptions, and address these failures in real time
define Business Environment and state the 3 major types of business pressures
Business environment: is the combination of social, legal, economic, physical, and political factors in which businesses conduct their operations
- Significant changes in any of these factors are likely to create business pressures on organizations.
Three major types of business pressures:
- Market,
- Technology,
- Societal pressures
define the 3 Market pressures
Globalization
Globalization: the integration and interdependence of economic, social, cultural, and ecological facets of life, made possible by rapid advances in information technology.
- Globalization is markedly increasing competition from people and companies all over the world
- Ex. Multinational corporations (global), manufactures using parts around the world, WTO, EU
The Changing Nature of the Workforce
The workforce, particularly in developed countries, is becoming more diversified. Increasing numbers of women, single parents, members of visible minorities, and persons with disabilities are now employed in all types of positions.
Powerful Customers
Consumer sophistication and expectations increase as customers become more knowledgeable about the products and services they acquire. Customers can use the Internet to find detailed information about products and services, to compare prices, and to purchase items at electronic auctions.
Define the 2 Technology pressures
what is BYOD?
Technological Innovation and Obsolescence
New and improved technologies rapidly create or support substitutes for products, alternative service options, and superb quality.
* Ex. how fast are new versions of your smartphone being released? - Apple releases a new iPhone each year
- One manifestation of technological innovation is “bring your own device (BYOD).” BYOD refers to the policy of permitting employees to bring personally owned mobile devices (laptops, tablet computers, and smartphones) to the workplace
○ However, there is an increased risk of Malware (confidential information leaked)
Information Overload
The Internet and other telecommunications networks are bringing a flood of information to managers. To make decisions effectively and efficiently, managers must be able to access, navigate, and use these vast stores of data,
information, and knowledge.
define the four Societal/Political/Legal pressures
Social Responsibility
Organizational social responsibility or individual social responsibility: aims to contribute to societal goals of philanthropic, activist, and contributing to charities, community development, or to conduct ethically oriented business and investment practices
Compliance with Government Regulations
Government regulations regarding health, safety, environmental protection, and equal opportunity. Businesses tend to view government regulations as expensive constraints on their activities. In general, government deregulation intensifies competition.
Protection against Terrorist Attacks
Computer systems can be used to create fraudulent or fictitious transactions that are used to steal funds from banks or other organizations, or to engage in identity theft—the use of another person’s identity for financial gain. Individuals and organizations need to protect their information to help prevent these actions
Ethical Issues
Information ethics relates specifically to standards of right and wrong in information processing practices. Ethical
issues are important because, if handled poorly, they can damage an organization’s image and destroy its employees’ morale.
define the 4 Organizational Responses (to pressures)
Hint for one: define Make-to-order and Mass customization
Strategic Systems
Strategic systems provide organizations with advantages that enable them to increase their market share and profits to better negotiate with suppliers and to prevent competitors from entering their markets.
Customer Focus
Organizational attempts to provide superb customer service can make the difference between attracting and retaining customers versus losing them to competitors.
Make-to-Order and Mass Customization
Make-to-order: is a strategy of producing customized (made to individual specifications) products and services.
The business problem is how to manufacture customized goods efficiently and at a reasonably low cost. Part
of the solution is to change manufacturing processes from mass production to mass customization
- Ex. An early example of mass production was Henry Ford’s Model T, for which buyers could pick any colour they wanted—as long as it was black.
Ford’s policy of offering a single product for all of its customers eventually gave way to consumer segmentation, in which companies provide standard specifications for different consumer groups, or segments
Mass customization: a company produces a large quantity of items, but it customizes them to match the needs and preferences of individual customers
* Ex. NikeID allows customers to design their footwear.
E-Business and E-Commerce
Electronic commerce (EC or e-commerce) describes the process of buying, selling, transferring, or exchanging
products, services, or information through computer networks, including the Internet
