Professional Documents
Culture Documents
Business Process
Contents
• Organizational strategy and mission
• Organizational structures
• Business process
• Business process re-engineering
2
Organisational strategy & mission
• Mission Statement: typically contains an
expression of the organisation’s vision,
business domain, competencies and values
– Vision: what the organization wants to be
– Business domain: the area in which the business
will operate
– Competencies: the business’ unique strengths
– Values: principles upon which the business will
operate
3
Examples
Outstanding professionals, working together to deliver value. We
offer Audit, Tax and Advisory services. Three complementary areas
of knowledge and insight that enable us to meet the needs of our
clients. We turn knowledge into value for the benefit of our
clients, our people and the capital markets. (KPMG)
4
Organisational strategy & mission
• Strategy: a choice about a course of action, a
means of putting a mission statement into
practice
• Strategy operates at three levels:
– Internal: decisions made within organization
– Competitive: concerned with understanding the
industry in which the organization operates
– Business portfolio: decision of which industry an
organization should compete within and how the
organization can compete new industries
5
Strategy Options
• According to Michael Porter, businesses have
two options when deciding on a strategy:
– Cost Leadership: Organisations need to carry out
their activities cheaper than their competitors
through economies of scale, technology, low
overheads etc
– Differentiation: Involves creating a business
adding that little bit extra for customers, offering
unique products targeted to the customer’s needs
6
Strategy Options
7
Porter’s Five Forces Model
For an organization to distinguish itself from
its competitors and succeed, it needs to
understand forces that shape the industry in
which it operates
Industry
8
Porter’s Five Forces Model
1. Rivalry among existing competitors: refers to
the current status within the market that a
business operates within
9
Porter’s Five Forces Model (Cont)
3. Bargaining power of suppliers: a supplier can
find itself in a strong bargaining position if it
is the only business able to provide a
particular product or service
10
Porter’s Five Forces Model (Cont)
5. Threat of new entrants: new organisations
entering an industry create increased
competition for the existing participants
11
The influence of technology
• New industries
• Wider audience
• New channels for cooperation
12
The influence of technology
• Online auctions
• Markets for music and movies
iTunes
• E-books
• For customers: more information, better
choices
13
Organizational design
• Organizational design: the organization of a
business enterprise through the structure of
the relationships, interactions and reporting
responsibilities among staff
• Two main approaches
– Functional perspective
– Business process perspective
14
Functional perspective of the organisation
15
Functional perspective of the organisation
16
Functional perspective of the organisation
• Benefits
– Control and coordination
– Specificity: highly defined and specified tasks exist
• Problems and limitations
– Not reflective of the reality of today
– Information and communication problems
– Slow to react to the environment
– Focuses on the wrong things, i.e. boss-oriented vs.
customer-oriented
17
What is a Business Process?
18
A Process Based Organisation
19
Functional vs Process
Functional Process
perspective perspective
Focus What is done How it is done
20
Examples of business processes
Sales
21
Examples of business processes
Purchasing
23
ERP and Business Process
• Functional perspective leads to separate
software applications in one organization
• Enterprise resource planning is a system
providing many functionalities for business
• ERPs are developed based on best practices
24
ERP Systems
• Advantages: • Disadvantages:
– Integrated modules – Costly system to
– Reflects the reality of change
a process-driven – May not suit the
system current processes in
– Performance of an organisation
customer service-
based processes could
improve
25
Issues in moving to a BP based environment
• Management Change
– Functionally based structure must be changed
– Support must come from the top
• People Change
– Narrowly defined specialist jobs may become
generalist and diverse
– Reduction of middle management – increased
authority to those lower in the organisation
26
Changing Business Processes
• Business processes are not static
• Factors impacting on business processes
– Technology
– Competition
– Business environment
• The means of changing processes is referred
to as business process design
27
Business Processes Design Approaches
• Total Quality Management (TQM)
• BP Re-engineering (BPR)
• Eclectic
28
TQM
• TQM is a progressive approach to organisational
change that works on the principle that a series of
small progressive steps is the best way to improve
operations
• The philosophy of TQM is geared around four main
concepts:
– Quality People
Quality Management
– People
– Organisations Organizations
– Management
29
Business Process Re-Engineering (BPR)
BPR is defined as:
30
Key Components of BPR
1. Fundamental aspect forces an organisation
to question what activities it performs as part
of its current process
2. Radical component enforces organisations to
start again, redesign from scratch
3. Dramatic refers to the expected return on
the improvements.
4. Process aspect is central to BPR, organization
should forget about hierarchical system
31
Principles and Approaches
1. Establish a sense of urgency
32
Principles and Approaches (Cont)
5. Plan for and create short term wins
33
BPR Principles in Practice
1. Combine jobs and let workers make decisions
35
Technology driven process improvements
36
Examples of Process Improvements
• Vendor-managed inventory
• Evaluated receipts settlement (ERS)
– No need to wait for invoices
• Electronic bill payment (EBP)
– Example: BPAY
• Electronic bill presentment and payment (EBPP)
– Similar to EBP except the invoice is a electronic
document
• RFID or barcoding
37
BPAY Example
1. The university sends the invoice (including
biller code and reference number) for re-
enrolment to the student
2. Student accesses bank facilities by phone or
the Internet
3. The money will be transferred from student’s
account to the university’s account
4. Information of the transaction will be also
sent to the university
38
BPR Evaluated
• Benefits
– As mentioned in business process section
• Risks
– Re-engineering is often perceived as “downsizing”
– Nothing left to fall back on if fails
39
ERP Systems
• An ERP system is a set of computer program
modules that attempts to integrate the
different functional areas of the organisation
40
What are Australian Organisations Doing with IT &
Processes
41
Review of Chapter 2
• Components of organisational strategy
• Described BPR
44
45