Business Processes
are the activities organizations perform to reach their business goals, including core activities that transform inputs and produce outputs, and supporting activities that enable the core activities to take place
Organizations are composed of different decision-making levels
- Operational Level: the routine day-to-day business processes and interactions with customers. Information systems at this level are designed to automate repetitive activities, such as sales transaction processing, and to improve the efficiency of business processes at the customer interface.
- Managerial Level: focus on monitoring and controlling operational-level activities and providing information to higher levels of the organization. Hence, the information systems at this level improve effectiveness by automating the monitoring and controlling of operational activities.
- Executive Level
The focus is on long-term strategic questions facing the organization, such as which products to produce which countries to compete in and what organizational strategy to follow. Information systems at this level help to improve strategy and planning by providing summaries of past data and projections of the future.
Organizations are composed of different decision-making levels
- Operational Level: the routine day-to-day business processes and interactions with customers. Information systems at this level are designed to automate repetitive activities, such as sales transaction processing, and to improve the efficiency of business processes at the customer interface.
- Managerial Level: focus on monitoring and controlling operational-level activities and providing information to higher levels of the organization. Hence, the information systems at this level improve effectiveness by automating the monitoring and controlling of operational activities.
- Executive Level
The focus is on long-term strategic questions facing the organization, such as which products to produce which countries to compete in and what organizational strategy to follow. Information systems at this level help to improve strategy and planning by providing summaries of past data and projections of the future.
A transaction is
anything that occurs as part of a firm’s daily business of which it must keep a record.
Structured Decisions are
those in which the procedures to follow for a given situation can be specified in advance. These can be programmed directly into operational information systems so that they can be made with little or no human intervention. (e.g. inventory management system)
At the operational level information systems are typically used to
increase efficiency - (goals are achieved faster, at lower cost, or relatively little time and effort)
At the managerial level, midlevel managers focus on
effectively utilising and deploying orgnisational resources to increase effectiveness
decisions at the managerial level are
semistructured decisions, where some procedures to follow for a given situation can be specified in advance, but not to the extent where a specific recommendation can be made
Key Performance Indicators (KPI’s) are
metrics that assess the progress towards a certain goal that are displayed on performance dashboards.
Functional Area Information Systems are designed to
support the unique business processes pf specific functional areas
At the executive level decisions are
unstructured Decisions, where there are few or no procedures to follow for a given situation to be specified in advance
Information systems are used at different levels of an organization to
support automating and organisational learning, and to support strategy
- automating: this perspective thinks of technology as a way to help complete a task within an organisation faster, cheaper, and perhaps with greater accuracy.
- Organisational Learning: the ability of an organisation to use past behaviour and information to improve its business processes.
- Organisational Strategy: firm’s plan to accomplish its mission and goals as well as to gain or sustain competitive advantage over rivals.
- Strategic Planning: form a vision of where the organisation needs to head, convert that vision into measurable objectives and performance targets, and craft a strategy to achieve the desired results.
- Low-Cost leadership strategy: offer the best prices in the industry on goods/services.
- differentiation strategy:provide better products/services than competitors.
- best-cost Provider strategy: offering products or services reasonably good quality at competitive prices
Sources of having a competitive advantage:
- Being the first to enter the market (i.e. having a First-Mover Advantage) 2. Having the best-made product on the market
- Delivering superior customer service
- Achieving lower costs than rivals
- Having a proprietary manufacturing technology, formula, or algorithm
- Having shorter lead times in developing and testing new products
- Having a well-known brand name and reputation
- Giving customers more value for their money
To develop and sustain a competitive advantage, organisations must have
resources/capabilities that are superior to those of their competitors:
- Resources - reflect the organisation’s specific assets that are utilised to create cost or product differentiation from their competitors.
- Capabilities - reflect the organisation’s ability to leverage these resources in the marketplace.
Together resources and capabilities provide the organisation with
Distinctive Competences (such as innovation, agility, quality, or low cost) that help to pursue the organisational strategy.
The competencies help to pursue the organisational strategy and make the organisation’s product valuable to its customers relative to its competitors;
superior Value Creation
occurs when an organisation can provide products at a lower cost or with superior benefits to the customer.
Five forces that influence the level of competitiveness in an industry, known as
Porter’s Five Forces:
Industry rivalry
power of buyers
power of sellers
threat of substitutes
threat of new entrants
The Value Chain
refers to the set of activities that add value throughout the organisation.
Value Chain Analysis
is the process of analysing an organisation’s activities to determine where value is added to product/services and what costs are incurred for doing so.
Information Systems can
automate many activities along the value chain.
Organisations are trying to maximise
Business/IT Alignment where systems are matched with strategy.
Strategic Necessity
Sometimes, organisations have no choice in making some types of investments that may or may not coincide with their overall strategy. Such investments are called strategic necessity.
something the company does to survive
A Business Model is
a summary of a business’s strategic direction that outlines how the objectives will be achieved; this specifies the Value Proposition
Value Proposition
how a company will create, deliver, and capture value.
