Topic 2 - Organizational Strategy, Competitive Advantage, and Information Systems

Question 1

Competitive advantage

Answer 1

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.

Question 2

Business process

Answer 2

An ongoing collection of related activities that create a product or service of value to the organization, its business partners, and its customers.

Question 3

What are the three fundamental elements of the business process?

Answer 3

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.

Question 4

Efficiency

Answer 4

Focuses on doing things well without wasting resources in the process.

Question 5

Effectiveness

Answer 5

Focuses on doing the things that matter; that is, creating outputs of value to the process customer.

Question 6

Cross-functional processes

Answer 6

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.

Question 7

Procurement process

Answer 7

Includes all of the tasks involved in acquiring needed materials externally from a vendor

Question 8

Executing the process

Answer 8

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.

Question 9

Capturing and storing process data

Answer 9

• 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.

Question 10

Monitoring process performance

Answer 10

• 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.

Question 11

Robotic process automation (RPA)

Answer 11

A system that enables enterprises to automate business processes and task that were historically carried out by employees.

Question 12

Business process reengineering (BPR)

Answer 12

A radical redesign of a business process that improves its efficiency and effectiveness, often by beginning with a “clean sheet” (i.e., from scratch).

Question 13

Business process improvement (BPI)

Answer 13

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.

Question 14

Six sigma

Answer 14

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.

Question 15

Define phase (Five basic BPI phases)

Answer 15

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.

Question 16

Measure phase (Five basic BPI phases)

Answer 16

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.

Question 17

Analysis phase (Five basic BPI phases)

Answer 17

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.

Question 18

Improve phase (Five basic BPI phases)

Answer 18

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.

Question 19

Control phase (Five basic BPI phases)

Answer 19

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.

Question 20

Business process management (BPM)

Answer 20

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.

Question 21

Business activity monitoring (BAM)

Answer 21

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.

Question 22

Business process management suites (BPMS)

Answer 22

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.

Question 23

Social BPM

Answer 23

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.

Question 24

Business environment

Answer 24

The combination of social, legal, economic, physical, and political factors in which businesses conduct their operations.

Question 25

Globalization

Answer 25

The integration and interdependence of economic, social, cultural, and ecological facets of life, made possible by rapid advances in information technology.

Question 26

Organizational social responsibility

Answer 26

Efforts by organizations to solve various social problems.

Question 27

Make-to-order

Answer 27

A strategy of producing customized (made to individual specifications) products and services.

Question 28

Competitive strategy

Answer 28

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.

Question 29

Strategic information systems (SISs)

Answer 29

Systems that help an organization gain a competitive advantage by supporting its strategic goals and increasing performance and productivity.

Question 30

Competitive forces model

Answer 30

A business framework devised by Michael Porter that analyzes competitiveness by recognizing five major forces that could endanger a company’s position.

Question 31

Threat of entry of new competitors (Porter’s five forces)

Answer 31

The threat that new competitors will enter your market is high when entry is easy and low when they are significant barriers to entry.

Question 32

Entry barrier

Answer 32

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.

Question 33

Bargaining power of suppliers (Porter’s five forces)

Answer 33

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.

Question 34

Bargaining power of customers (Porter’s five forces)

Answer 34

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.

Question 35

Threat of substitute products or service (Porters five forces)

Answer 35

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.

Question 36

Rivalry among existing firms in the industry (Porter’s five forces)

Answer 36

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.

Question 37

Value chain

Answer 37

A sequence of activities through which the organization’s inputs, are transformed into more valuable outputs.

Question 38

Value chain model

Answer 38

Model that shows the primary activities that sequentially add value to the profit margin; also shows the support activities.

Question 39

Primary activities

Answer 39

Activities that relate to the production and distribution of the firm’s products and services.
- Inbound logistics
- Operations
- Outbound logistics
- Marketing and sales
- Services

Question 40

Support activities

Answer 40

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

Question 41

Cost leadership strategy

Answer 41

Produce products and services at the lowest cost in the industry.

Question 42

Differentiation strategy

Answer 42

Offer different products, services, or product features than your competitors.

Question 43

Innovation strategy

Answer 43

Introduce new products and services, add new features to existing products and services, or develop new ways to produce them.

Question 44

Operational effectiveness strategy

Answer 44

Improve the manner in which a firm executes its internal business processes so that it performs these activities more effectively than its rivals.

Question 45

Customer orientation strategy

Answer 45

concentrate on making customers happy.
- Ex. Amazon, Apple, Starbucks

Question 46

Business-information technology alignment

Answer 46

The tight integration of the IT function with the strategy, mission, and goals of the organization.