What is a business process?
A related group of activities encompassing several functions that produces a specific product or service of value to a customer or customers.
A business process is also activities that result in higher quality or lowered costs of a product or service.
Who introduced the concept of the value chain?
Michael Porter
In his 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance.
What is competitive advantage?
An advantage that a company has over its competitors by offering consumers greater value than they can get from its competitors.
Fill in the blanks:
___________ _________ makes the difference between a company that succeeds and a company that fails.
Competitive advantage
What two things must a company have or create if it is to have a competitive advantage?
- Distinctive competencies and the superior efficiency, quality, innovation, and customer responsiveness that result.
- The profitability that is derived from the value customers place on its products, the price that it charges for its products, and the costs of creating those products.
What are the four generic distinctive competencies that give a company competitive advantage?
- Superior efficiency
- Superior quality
- Superior innovation
- Superior customer responsiveness
What is a value chain?
A business unit’s chain of activities for transforming inputs into the outputs that customers will value.
Define:
Primary activities
(in the value chain)
Activities essential for adding value to the product or service and creating competitive advantage.
Define:
Support activities
(in the value chain)
Activities that support the primary activities and add value indirectly to the product or service.
What is the purpose of value chain analysis?
To identify the ways in which the organization creates value for its customers and to maximize value by increasing benefits or reducing non-value-adding activities, thereby gaining competitive advantage.
What are the steps in value chain analysis?
- Identify the activities that add value to the finished product.
- Identify the cost driver or cost drivers for each activity.
- Develop a competitive advantage by increasing the value to the customer or reducing the costs of the activity.
What is business process reengineering?
The restructuring of organizational processes brought about by rapidly changing technology and today’s competitive economy.
In business process reengineering, management redesigns processes to accomplish its objectives. Operations that have become obsolete are discarded.
What does business process reengineering involve?
It involves analyzing and radically redesigning the workflow to achieve significant improvements in performance.
It focuses on making quantum leaps rather than incremental improvements by starting with a clean sheet of paper to redesign processes.
Who are the key figures involved in a reengineering project?
- A reengineering project leader
- The process owner, the manager responsible for the process being reengineered
- The reengineering team, who diagnose the current process and oversee its redesign and the redesign implementation
- A reengineering steering committee, a group of senior managers who determine the organization’s overall reengineering strategy and oversee it
- A reengineering czar, who is responsible for developing reengineering techniques to be used throughout the organization and for coordinating the company’s various reengineering projects
What are the criteria for prioritizing processes for reengineering?
- Most dysfunctional processes
- Greatest impact on customers
- Most feasible for reengineering
These criteria help determine which processes should be reengineered first to maximize benefits.
What is the primary focus when beginning the reengineering process?
It begins with the customer, focusing on reorganizing work to provide the best quality and lowest-cost goods and services.
What is benchmarking?
The process of measuring an organization against the products, practices, and services of its most efficient global competitors or other segments of the company, in order to identify and adopt best practices.
It aims to identify and adopt best practices to improve efficiency, quality, and customer satisfaction.
The first thing a company should do when benchmarking is identify the critical success factors for its business and the processes it needs to benchmark.
What are critical success factors?
These are the actions an organization needs to take to achieve its goals and objectives, that are essential to its competitive advantage and therefore to its success.
What are the benefits of benchmarking?
- Helps a business establish standards for continuous improvement
- Identifies areas needing improvement
- Leads to increased efficiency and reduced costs
- Focuses on practices that promote customer satisfaction
- Provides data needed for effective change management
Define:
Kaizen
A Japanese term meaning “continuous improvement,” focusing on slow but constant incremental improvements in business operations.
What are the costs of quality?
They include costs of conformance (prevention and appraisal costs) and costs of nonconformance (internal and external failure costs).
What are the prevention costs of quality?
Costs incurred to prevent a defect from occurring in the first place, including:
- Design and process engineering costs
- Quality training
- Preventive maintenance
- Supplier selection and evaluation
- Evaluation and testing of materials
- Information systems costs
- Quality improvement program costs
What are the appraisal costs of quality?
Costs incurred to monitor production processes and individual products and services before delivery to determine whether all units of the product or service meet customer requirements, including:
- Testing and inspection costs
- Equipment and instrument costs for testing
- Quality audit costs
What are the nonconformance costs of quality?
Costs incurred after a defective product has been produced. They include:
- Internal failure costs - when a problem is detected before a product’s shipment to the customer
- External failure costs - when a defect is not detected until after the product is already with the consumer
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A.1. Financial Statements and Reporting Basics84
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A.1. Integrated and External Reporting20
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A.2. Receivables and Inventory83
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A.2. Investments and Consolidations45
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A.2. Fixed and Intangible Assets34
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A.2. Liabilities and Equity Transactions78
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A.2. Revenue Recognition and Long-Term Contracts38
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A.2. GAAP vs IFRS and Income Measurement14
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B.1. Strategic Planning76
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B.2. Budgeting Concepts and Standard Setting49
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B.3. Forecasting and Probability45
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B.4. Budget Methodologies26
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B.5. Profit Planning and Budget Schedules35
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B.5. Cost Estimation and Budget Reporting16
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B.5. Top-Level Planning8
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C.1. Cost and Variance Measures129
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C.2. Responsibility Centers and Transfer Pricing37
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C.3. Performance Metrics42
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D.1. Cost Classifications and Costing Methods56
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D.1. Joint and Byproduct Costing28
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D.2. Costing Systems: Process, Job-Order, and Life-Cycle23
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D.3. Overhead and Cost Allocation89
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D.4. Supply Chain and Lean Management39
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D.5. Business Process Improvement and Quality45
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E.1. Corporate Governance and Internal Control Framework72
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E.1. Transaction and Safeguarding Controls37
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E.1. External Audit and Reporting25
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E.2. System and Application Controls63
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E.2. Cybersecurity and Continuity Planning36
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F.1. Information Systems and Transaction Cycles40
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F.1. Databases and ERP Systems27
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F.2. Data Governance and Management14
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F.2. Cybersecurity: Threats and Defenses19
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F.3. Tech-Enabled Finance Transformation10
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F.3. Emerging Tech: AI, Cloud, Blockchain56
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F.4. Data Analytics and Business Intelligence35
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F.4. Analytical Models and Simulation45
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F.4. Data Visualization26
