Chapter 2

• business process: ongoing collection of related activities or tasks in a specific sequence create a product or a service of value to the organization, its business partners, and its customers
• a business process has three elements:

  1. inputs: materials, services, and information that flow through and are transformed as a result of process activities
  2. resources: people and equipment that perform process activities
  3. outputs: the product or service created by the process
• effectiveness is doing things that matter and add value to the business process customer
• efficiency is doing things without wasting resources
• procurement process: all task involved in acquiring needed materials externally from a vendor
• procurement has five steps:

  1. warehouse recognizes it needs materials, documents with a purchase requisition and sends to purchasing department
  2. purchasing department finds a vendor, creates purchase order
  3. vendor receives the order, ships materials to the warehouse
  4. vendor sends an invoice, received by the accounting department
  5. accounting sends payment to vendor, completing the process
• the fulfillment process is concerned with processing customer orders
• business process reengineering: a strategy for making an organization's business processes more productive and profitable
• business process improvement: organize work around business processes rather than individual tasks, less radical, less disruptive, and more incremental approach
• business process management: a management system that includes methods and tools to support the design, analysis, implementation, management, and continuous optimization of core business processes throughout the organization
• business pressures and effective IT responses:

  • market pressures: customer relationship management to help companies achieve customer intimacy
  • technology pressures: search engines enable managers to access, navigate, and use information
  • societal/legal/political pressures: green IT is one response that is intended to improve the environment
• Porter's five competitive forces:

  1. the threat of entry of new competitors
  2. the bargaining power of suppliers
  3. the bargaining power of customers
  4. the threat of substitute products or services
  5. the rivalry among existing firms in the industry
• five strategies to counter competitive forces:

  1. cost leadership strategy: produce products and services at the lowest cost in the industry
  2. differentiation strategy: offer different products, services, or product features
  3. innovation strategy: introduce new products and services in an innovative manner
  4. operational effectiveness strategy: improve the manner in which internal processes are executed
  5. customer orientation strategy: make customers happy
• business environment: the combination of social, legal, economic, physical, and political factors in which businesses conduct their operations
• business-information technology alignment: the tight integration of the IT function with the strategy, mission, and goals of the organization
• competitive advantage: an advantage over competitors in some measure such as cost, quality, or speed; leads to control of a market and to a larger-than-average profits
• cross functional processes: processes for which no single functional area is responsible for executing
• digital divide: the gap between those who have access to information and communications technology and those who do not
• entry barrier: product or service feature that customers expect from organizations in a certain industry; an organization trying to enter the market must provide this product or service at a minimum to be able to compete
• make-to-order: the strategy of producing customized products and servies
• mass customization: a production process in which items are produced in large quantities but are customized to fit the desires of each customer
• organizational social responsibility: efforts by organizations to solve various social problems
• primary activities: those business activities related to the production and distribution of the firm's products and services, thus creating value
• strategic information systems: systems that help an organization gain a competitive advantage by supporting its strategic goals and increasing performance productivity
• 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
• value chain: a sequence of activities through which the organization's inputs are transformed into more valuable outputs
• value system: a stream of activities that includes the producers, suppliers, distributors, and buyers, all of whom have their own value chains