Topic 2 - Organizational Strategy, Competitive Advantage, and Information Systems Flashcards
Competitive advantage
Any assets that provide and organization with an edge against its competitors in some measure such as cost, quality, or speed.
- Helps an organization control a market and accrue larger-than average profits.
Business process
An ongoing collection of related activities that create a product or service of value to the organization, its business partners, and its customers.
What are the three fundamental elements of the business process?
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 that is created by the process.
Efficiency
Focuses on doing things well without wasting resources in the process.
Effectiveness
Focuses on doing the things that matter; that is, creating outputs of value to the process customer.
Cross-functional processes
Processes for which no single functional area is responsible.
- To be successfully completed, each functional area must execute its specific process steps in a coordinated, collaborative way.
Procurement process
Includes all of the tasks involved in acquiring needed materials externally from a vendor
Executing the process
An IS helps execute the processes by informing people when it is time to complete a task, providing the necessary data to complete the task, and, in some cases, providing the means to complete the task.
Capturing and storing process data
- Processes create data such as dates, times, product numbers, quantities, prices and addresses, as well as who did what, when, and where.
- IS captures and stores process data or transaction data.
- IS captures data automatically.
Monitoring process performance
- IS indicated how well a process is executing by evaluating info about a process. This information can be created at either the instance level (i.e., a specific task or activity) or the process level (i.e., the process as a whole).
- IS can also detect problems with the process by comparing the info with a standard to determine if the process is performing within expectations.
Robotic process automation (RPA)
A system that enables enterprises to automate business processes and task that were historically carried out by employees.
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).
Business process improvement (BPI)
A less disruptive, and more incremental approach.
- Focuses on reducing variation in process outputs by searching for the root cause of the variation in the process itself or among the process inputs.
Six sigma
A popular methodology for BPI initiatives. Its goes is to ensure that the process has no more than 3.4 defects per million outputs by using statistical methods to analyze the process.
- Over years, the methodology has been modified so that it focuses less on defects and more on customer value.
Define phase (Five basic BPI phases)
BPI team uses a graphical process diagram to document the existing “as is” process activities, process resources, and process inputs and outputs. Also documents the customer requirements for the process output, together with a description of the problem to be addressed.
Measure phase (Five basic BPI phases)
BPI team identifies relevant process metrics, such as time and cost, to generate one output (product or service) and collects data to understand how metrics evolve over time. Sometimes the data already exist and the team can extract them from the IS that supports the process.
Analysis phase (Five basic BPI phases)
BPI teams examines the “as is” process diagram and the collected data to identify problems with the process (e.g., decreasing efficiency or effectiveness) and their root causes. If possible, the team should also benchmark the process; compare its performance with that of similar processes in other companies, or other areas of the companies.
Improve phase (Five basic BPI phases)
BPI team identifies possible solutions for addressing the root causes of the problem, maps the resulting “to be” process alternatives, and selects and implements the most appropriate solution. Improvements can be eliminating unnecessary process activities and/or rearranging the order of process activities. Must be careful not to eliminate process controls – activities that safeguard company resources, guarantee the accuracy of its financial reporting, and ensure adherence to rules and regulations.
Control phase (Five basic BPI phases)
Team establishes process metrics and monitors the improved process after the solution has been implemented to ensure the process performance remains stable. IS system can be useful for this purpose.
Business process management (BPM)
A management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.
- Businesses can adopt this to sustain BPI efforts over time.
- Begins with process modelling - a graphical depiction of all the steps in a process.
Business activity monitoring (BAM)
A real-time approach for measuring and managing business processes.
- Used to monitor business processes, identify failures or exceptions, and address these failures in real time.
Business process management suites (BPMS)
An integrated set of applications that includes a repository of process information such as process maps and business rules, tools for process modelling, simulation, execution, coordination across functions, and reconfiguration in response to changing business needs as well as process-monitoring capabilities.
Social BPM
Technology that enables employees to collaborate using social media tools on wired and mobile platforms, both internally across functions and externally with stakeholders, to exchange process knowledge and improve process execution.
Business environment
The combination of social, legal, economic, physical, and political factors in which businesses conduct their operations.
Globalization
The integration and interdependence of economic, social, cultural, and ecological facets of life, made possible by rapid advances in information technology.
Organizational social responsibility
Efforts by organizations to solve various social problems.
Make-to-order
A strategy of producing customized (made to individual specifications) products and services.
Competitive strategy
A statement that identifies a business’s approach to compete, its goals, and the plans and policies that will be required to carry out those goals.
Strategic information systems (SISs)
Systems that help an organization gain a competitive advantage by supporting its strategic goals and increasing performance and productivity.
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.
Threat of entry of new competitors (Porter’s five forces)
The threat that new competitors will enter your market is high when entry is easy and low when they are significant barriers to entry.
Entry barrier
A product or service feature that customers have learned to expect from organizations in a certain industry. An organization must offer this feature to survive in the marketplace.
Bargaining power of suppliers (Porter’s five forces)
Supplier power is high when buyers have a few choices about whom to buy from and low when buyers have many choices.
- Organizations would rather have more potential suppliers.
Bargaining power of customers (Porter’s five forces)
Buyer power is high when buyers have many choices about whom to buy from and low when buyers have few choices.
- Loyalty programs reduce buyer power.
Threat of substitute products or service (Porters five forces)
Many alternatives to an organization’s products or services = high threat of substitutes. Few alternatives = low threat.
- New tech can create substitute products rapidly.
- Switching costs can create a competitive advantage.
Rivalry among existing firms in the industry (Porter’s five forces)
The threat from rivalry is high when there is intense competition among many firms in an industry. Threat is low when the competition involves fewer firms and is not as intense.
Value chain
A sequence of activities through which the organization’s inputs, are transformed into more valuable outputs.
Value chain model
Model that shows the primary activities that sequentially add value to the profit margin; also shows the support activities.
Primary activities
Activities that relate to the production and distribution of the firm’s products and services.
- Inbound logistics
- Operations
- Outbound logistics
- Marketing and sales
- Services
Support activities
Business activities that do not add value directly to a firm’s product or service under consideration but support the primary activities that do add value.
- The firm’s infrastructure (accounting, finance, and management)
- Human resources management
- product and tech. development (R&D)
- Procurement
Cost leadership strategy
Produce products and services at the lowest cost in the industry.
Differentiation strategy
Offer different products, services, or product features than your competitors.
Innovation strategy
Introduce new products and services, add new features to existing products and services, or develop new ways to produce them.
Operational effectiveness strategy
Improve the manner in which a firm executes its internal business processes so that it performs these activities more effectively than its rivals.
Customer orientation strategy
concentrate on making customers happy.
- Ex. Amazon, Apple, Starbucks
Business-information technology alignment
The tight integration of the IT function with the strategy, mission, and goals of the organization.
