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:
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 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:
warehouse recognizes it needs materials, documents with a purchase requisition and sends to purchasing department
purchasing department finds a vendor, creates purchase order
vendor receives the order, ships materials to the warehouse
vendor sends an invoice, received by the accounting department
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:
the threat of entry of new competitors
the bargaining power of suppliers
the bargaining power of customers
the threat of substitute products or services
the rivalry among existing firms in the industry
five strategies to counter competitive forces:
cost leadership strategy: produce products and services at the lowest cost in the industry
differentiation strategy: offer different products, services, or product features
innovation strategy: introduce new products and services in an innovative manner
operational effectiveness strategy: improve the manner in which internal processes are executed
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