Multinational business Lecture, week 3 FINANCING THE OPERATIONS OF THE MULTINATIONAL ENTERPRISE.
WEEK 2: ENTERPRISE SYSTEMS & BUSINESS PROCESS … · 2018. 2. 23. · WEEK 2: ENTERPRISE SYSTEMS &...
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WEEK 2: ENTERPRISE SYSTEMS & BUSINESS PROCESS REENGINEERING BUSINESS PROCESSES: Mission statement: expression of the organisation’s vision, business domain, competencies and values Strategy: choice about a source of action, means of putting a misn statement into place Three levels of strategies: 1. Internal: decisions that are made within an organisation 2. Competitive: understanding the industry the company operates in 3. Business portfolio: which industry the company should compete within and how to compete with new industries Strategy (Cont.): • Determines how an organisation deals with its competitor and what products to sell to what markets and through what delivery methods 1. Cost leadership: Carries out activities cheaper than other firms e.g. economies of scale, technology, low overhead costs 2. Differentiation strategy: businesses adding extra for customers – can charge higher price / offering unique products and services targeted to a customer’s needs Implementation and attainment of these alternative strategies consists of 5 steps [Porter’s] 1. Operational effectiveness: being able to do things better than competitor 2. Uniqueness: activities different to rest of the markets 3. Trade-offs: make conscious choices about market it wishes to serve, the product or service it wishes to provide & means of delivery 4. Fit: how different activities in an organisation combine to achieve a common objective 5. Sustainability: more activities = harder for competitors 5 Forces that shape industry [Porter’s] 1. Rivalry among existing competitors 2. Threat of substitute products or services 3. Bargaining power of supplies 4. Bargaining power of buyers 5. Threats of new entrants Reasons for business process (re) design: • Management Change: Functionally based structure must be changed. Drive comes from the top • People Change: Narrowly defined specialist jobs may become generalist and diverse. Note: Business processes are not static. New technology, fierce competition, change to business environment 2 Major Approaches of business process (re) design: 1. Total Quality Management (TQM) 2. Business Process Re-Engineering (BPR) Total Quality Management: series of small progressive steps is the best way to improve operations 1. Quality: cost of poor quality are greater than the costs associated with developing and refining business process to generate high-quality output
Transcript of WEEK 2: ENTERPRISE SYSTEMS & BUSINESS PROCESS … · 2018. 2. 23. · WEEK 2: ENTERPRISE SYSTEMS &...
WEEK2:ENTERPRISESYSTEMS&BUSINESSPROCESSREENGINEERING
BUSINESSPROCESSES:
Missionstatement:expressionoftheorganisation’svision,businessdomain,competenciesandvalues
Strategy:choiceaboutasourceofaction,meansofputtingamisnstatementintoplace
Threelevelsofstrategies:
1. Internal:decisionsthataremadewithinanorganisation2. Competitive:understandingtheindustrythecompanyoperatesin3. Businessportfolio:whichindustrythecompanyshouldcompetewithinandhowtocompete
withnewindustries
Strategy(Cont.):
• Determineshowanorganisationdealswithitscompetitorandwhatproductstoselltowhatmarketsandthroughwhatdeliverymethods
1. Costleadership:Carriesoutactivitiescheaperthanotherfirmse.g.economiesofscale,technology,lowoverheadcosts
2.Differentiationstrategy:businessesaddingextraforcustomers–canchargehigherprice/ offeringuniqueproductsandservicestargetedtoacustomer’sneeds
Implementationandattainmentofthesealternativestrategiesconsistsof5steps[Porter’s]
1. Operationaleffectiveness:beingabletodothingsbetterthancompetitor2. Uniqueness:activitiesdifferenttorestofthemarkets3. Trade-offs:makeconsciouschoicesaboutmarketitwishestoserve,theproductorserviceitwishes
toprovide&meansofdelivery4. Fit:howdifferentactivitiesinanorganisationcombinetoachieveacommonobjective5. Sustainability:moreactivities=harderforcompetitors
5Forcesthatshapeindustry[Porter’s]
1. Rivalryamongexistingcompetitors2. Threatofsubstituteproductsorservices3. Bargainingpowerofsupplies4. Bargainingpowerofbuyers5. Threatsofnewentrants
Reasonsforbusinessprocess(re)design:
• ManagementChange:Functionallybasedstructuremustbechanged.Drivecomesfromthetop• PeopleChange:Narrowlydefinedspecialistjobsmaybecomegeneralistanddiverse.
Note:Businessprocessesarenotstatic.Newtechnology,fiercecompetition,changetobusinessenvironment
2MajorApproachesofbusinessprocess(re)design:
1. TotalQualityManagement(TQM)2. BusinessProcessRe-Engineering(BPR)
TotalQualityManagement:seriesofsmallprogressivestepsisthebestwaytoimproveoperations
1. Quality:costofpoorqualityaregreaterthanthecostsassociatedwithdevelopingandrefiningbusinessprocesstogeneratehigh-qualityoutput
2. People:howpeoplewithinorganisationarevaluedfortheircontributiontowardstheprocessandtheirideaonhowtheprocesscanbeimproved
3. Organisation:ensuredepartmentsdonotoperateseparatelyàneedtointeract4. Management:Managementmustfocusonprocessesratherthanindividualfunctions.Mustcome
fromthetop
BusinessProcessRe-Engineering(BPR)
• Radicalchangestoachievedramaticimprovementso e.g.cost,quality,service&speed
• Thiscanberiskythoughàifgoeswrong,andestroywhatyoualreadyhave• Keycomponents:
o Fundamental:forcesanorganisationtoquestionwhatactivitiesitperformsaspartofitscurrentprocess
o Radical:compelsorganisationstostartagaino Dramatic:expectedreturnontheimprovementso Process:aspectiscentraltoBPR
• Principlesinpractice:o Combinesjobsandletworkersmakedecisionso Createsasinglereferencepointforcustomerso Performstepsinanaturalorderandattheirlogicallocationo Allowprocessestovaryo Reducetheimpedimentofcontrolsandreconciliations
• PrinciplesandapproachesforaBPRteam:o Establishasenseofurgency–convinceeveryonetochangeo Formaleadershipteam–whoshouldbetheteammembers?o Createandcommunicateavisiono Empowerotherstomeetthevision–employeere-training?o Planforandcreateshortteamwins–positivefeedbacko Consolidateimprovementsandencouragefurtherchange–notjustchangetheprocesses,
changingthecompanyo Institutionalisethenewapproaches–newwaybecomestheusualway
• Technology-drivenprocessimprovements:o Technologyenablerofbusinessprocesses–hastobedonecorrectly(e.g.barscanner)
• OutcomesfromBPRo Functionaltoprocesso Jobchange,peopleempoweredtofitproblemso Highrisk,lotsofchangeo Dictatedfromthetop
• Examples:o Barcode,vendormanagedinventory(outsourcesinventory),electronicbillpayment,BPAY
• Technology:o Fourofbenefits
1. Information-based2. Strategy-based3. Transaction-based4. Change-based
EnterpriseInformationSystems(EIS)
• Softwareapplications–usedbybusinessestocapturetransactionsandproduceoutputsforplanning,decisionmakingandstatutoryreporting
• ThreecategoriesofEIS1. Single-entrysystems2. Inwardlyorganisedsystems3. Outwardlyorganisedsystems–suggestwaystoimprovesourcingorrawmaterialsor
increasingrevenue/increasecustomerexperience• Threetypicalprocesses:
o Sales(=‘Revenue’or‘Fulfilment’)o Purchasing(=‘Expenditure’or‘Procurement’)o Production(=’Manufacture’)
• ThreeCategoriesofEIS:o Single-entrysystems
§ Recordtransactionandobligations§ Designedforindividualusers§ Requireslittleaccountingknowledge,easytouse,performfinancialMGMT,
investmentprocessandtrackinvestmentperformanceo Inwardlyorganisedsystems
§ Recordandmonitorbusinessandmanufacturingprocesseswithinorganisations§ Captureallinternalactivitiesofanorganisation
o Outwardlyorganisedsystems§ Supposedorganisation’sinternalactivities§ Extendthecaptureofdatatosuppliers
• Choosingasoftware
o Definethebusinessprocesso Lookatbusinessrequirementso Determinewhatthesystemneedso Lookatcategoryofsoftwareneededbytheorganisationo Determinethevendorthatwillprovidethesoftware
• Single-entrySystemso Softwareonlyrecordstransactionsandobligationso Forindividualuserorsmallbusinesseso Recordcashtransactionsthroughalinktotheorganisationsbanko Requireslittleaccountingknowledge+easytouseo Lakofclassificationinthesystemo Doesn’tlookatnon-financialinformation
• BookkeepingSystemso Makeuseofaccrualaccountingconceptso Usedbysmallbusinesso Cangeneratenon-financialinfoo Easytouse,canbeusedonafewnetworkso Allpre-programmedreports,ledgersandchartsofaccountso E.g.MYOB
• HybridSystemso Integratesoperationsandfinancialfunctionso Looksatmanufacturing,inventory,warehouseandcustomerinformationsystemso Helpswithdecisionstodowithoperationsandfinancebutrequireslotsofeffortto
integrates
EnterpriseResourcePlanning(ERP)Systems
• Softwaredesignedtocaptureawiderangeofinfoaboutallkeybusinesseventsincludingaccounting,finance,HR,sales,markingandmanufacturing
• Eachvendorhastheirownbusinessprocessesandorganisationtendstoadopttheseoutforconvenience
• Allactivitieshavedataonwho,what,whereandwhen• ERPsystemsfacilitatetheflowofinformationbetweenallbusinessfunctions(i.e.departments)inside
theboundariesoftheorganisationàERPisaninwardlyorganisedsystem• ERPsupport:revenuesalesorordercash
o Paymentpurchasesorpurchasestopayo Productionmanufacturingorconversiono Humanresourcesandpayrollo Generalledgerandfinancialreporting
• Theyareinwardlyorganisedsystem:facilitatetheflowofinformationbetweenallbusinessfunctions• Businessdata:containsfinancialandnon-financialreferenceinformationthatrecordsandtracksthe
statusofbusinessactivitiespriortocompletion• MasterData:containscompletedtransactionalinfosuchassalestransactions• Benefits:easierglobalintegrations,reducesmoneybarriers
o Don’thavetoupdateeachcomputerseparatelyo Eitherquantifiablebenefitsandintangiblebenefitso Reducescostofinventory,materialsandlabouro Improvescustomerserviceandsaleso Increasedreturnoninvestmento Nolongerhaveduplicatedfiles
• Canbeidentifiedintotwotypesofbenefitso Quantifiablebenefitso Intangiblebenefits
• Single-sourcedERP:allsystemormodulecontainedwithinthesystemareprovidedbyasinglesoftware
• Best-of-bred:allowsorganisationstochoosemultipleERPvendorswiththebestfunctionality
Single-Source Best-of-Breed
Functionality Fitbestinorganisationthatspanabroadrangeoffunctionswherehorizontalstructuresarerequired
Fitbestinorganisationsthatarehighlyverticallyintegratedandrequirespecialfeaturesspecialfeaturesfortheiroperationsandbusinessprocesses.
Supply&Support Easyupgrades,supplyandsupportbyoneERPvendor
UpgradesareunsynchronisedandorganisationsneedtorundifferentversionsofERPmodules
LookandFeel Astandardisedpresentation Adifferentlookandfeelforeachofthemodules
UserTraining Trainedingroupsforthecompletesuiteofsoftware
Usersnormallyspecialiseintheirownapplicationswithseparatetrainings
CodeTable Shareddatabaseacrosstheorganisation.Onelocationofdata.
Multipledatatables,multipledataformats.
• ModulesinERPo Salesanddistributiono MaterialsManagemento FinancialAccountingo Controllingandprofitabilityanalysiso Humanresources
MichaelPorter’sValueChain:
• Inboundlogistics–receiving,storinganddisseminatinginputstotheproducts• Operations–transforminginputsintofinalproduct• Outboundlogistics–collecting,storingandphysicallydistributingtheproducttobuyers• Marketingandsales–inducingthebuyerstopurchasetheproductandprovidingameansforthem
todoso• Service–assistingcustomer’suseoftheproductandthusmaintainingandenhancingtheproduct’s
value
WEEK3:SYSTEMSDOCUMENTATION
SYSTEMDOCUMENTATION:
• awayofvisuallydepictingtheoperationsofasystem• amap–howthingsmovearoundandwhattheyare• roadmapstounderstandbusinessandnavigateprocesses• Addressesoneormoreofthefollowing:
o Whoisinvolvedo Whatactivitiesoccuro Wheredotheactivitiesoccuro Wheredotheactivitiesfitwithintherestoftheorganisation
Whydoweneedthem?
• Can’trelyonverbaldescription,weneedtodocumentit• Needtoensurethateveryoneunderstandstheprocess,mayhaveseveraldifferentdescriptions
o E.g.textualandgraphical• Organisationshaveoverlappingdepartmentsthattransferinformation• Servesasorganisationmemory• Visualisesbusinessprocessandhowdatamoveswithinanorganisation
Whydoaccountantsneedit?
• Interestedinoperationsofbusinessprocesses,internalcontrolsanddataflowswithorganisations• Cannavigatedifferentprocess
MajortypesofSystemdocumentation:
• Nomethodwillprovideeverything
ProcessMaps:
• Asimplegraphicalrepresentationofabusinessprocess• Solidlinesarefunctionalareas• Sub-functionsseparatedwithdashedlines• Lineswitharrowsaredocuments• Rectangle=process(notdocuments),diamond=decision• Readlefttoright,toptobottom
SystemFlowchart:
• Illustratedinputs,processesandoutputsinmoredetailthanDFDorprocessmaps• Hasinformationaboutdocumentsandprocessesperformedwiththesystemaswellasthoseinvolved
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DataFlowDiagram(DFD)
• Graphicalrepresentationofthedataflowthatoccurwithinasystem.• Threetypes
o Contextdiagrams§ Outlinesgeneralscenario§ Providesarepresentationofthesystemandtheentitiesthatprovideinputsto,or
receiveoutputsfromthesystemofinterest§ Onlyhasonebubble§ Mustbeatleastoneexternalentity§ Canhavemultipleflowsfromentity§ Saysnothingaboutwhatishappening§ Showshowmanyexternal/internalentities§ Rectangles=externalentities
•
o PhysicalDFD§ Outlineswho,whereandhow§ Number=structurednarrative§ Doublelines=representswherethedataisstored§ Havesamenumberofrectanglesasitscorrespondingcontextdiagram§ Bubblesnamescanbeaperson,departmentorthing§ Depictsthenormalprocess§ Inotherwords,errorroutinesareNOTdepictedinphysicalDFD
o o LogicalDFD
§ Outlineswhatishappening§ Showswhatproceduresarehappeninginthesystem§ Notallnumberspresent§ Canshowmanydifferentlevels
§ CircledepictsprocessNOTentity(e.g.entersales,createbatchtotal)
• Itcanbeexplodedintomanylevelsdependinguponthecomplexityofthesystemofinterest• Errorroutinesareonlydepictedonlowerleveldiagrams(i.e.belowlevel0)
o Level0logicalDFD–highestlevelofdepictionofthemajorgroupofactivitiesinthesystemofinterest
o Level1logicalDFD–takesoneoftheprocessbubblesfromlevel0andexpandsittoprovidedetailabouttheactivities
Entities:anyperson(who)orthing(what)involvedintheactivitiesofabusinessprocess
• DFDsidentifytwotypesofentities:
o Anexternalentityisanyentitythatprovidesinputsintoaprocessorreceivesoutputsfromaprocess.
• Contextdiagrams,physicalDFDandlogicalDFDusesrectanglestorepresentexternalentities
o Aninternalentityisanentitythatprocessesortransformsthedatawithinthebusinessprocessofinterest.
• ContextdiagramsandlogicalDFDdonotshowinternalentities
• PhysicalDFDusecirclestorepresentinternalentities
• Notethat,anexternalentityisnotnecessarilyexternaltoanorganization
Structurednarration:writtendescriptionofhowaprocessoperates
WEEK4:DATAFLOWDIAGRAMS:
BALANCING:
• Diagrams(context,physicaldataandlogicaldataflow)withthesameexternalentitiesandflowstoandfromtheseexternalentitiesarecalledbalanceDFD)
• Canhavedifferentnumberorbubbles,theflowneedtobalance• Theyarebalancedwhere
o TwoDFDshaveequivalentexternaldataflowso Todrawthemcorrectly,thefollowingpairsshouldbebalanced
• Contextandphysical• Physicalandlogicallevel0• Contextandlogicallevel0
• DevelopingaCONTEXTDiagram:(Narrationisgiven)1. Identifythesystemofinterest
• Drawabubbleandlabelittorepresentthesystemofinterest2. Identifytheexternalentities
• Drawandlabelarectangleforeachexternalentity3. Identifyanydataflowsbetweentheexternalentitiesandsystemofinterest4. Drawinthedataflowsconnectingtheexternalentitiesandsystemofinterestand
labelthemaccordingly• Rectanglesaroundentities• Circlearoundactivities• Doublelinesarounddatastores
o Checklist§ Only1bubble§ Nodatastore§ Bubblenameistodescribeprocess§ Alldataflowshavelogicalnames
• DevelopingaPHYSICALDFD1. Identifytheexternalentities
• Drawandlabelarectangleforeachexternalentity2. Identifytheinternalentities
• Drawandlabelarectangleforeachexternalentity3. Drawinabubbleforeachinternalentityandlabelaccordingly4. Identifyanydataflowsbetweenexternalandinternalentities
• Drawintheseflowsandlabelthedataflowarrows5. Identifythedataflowsbetweentheinternalentities
• Drawinthedataflowsbetweeninternalentitiesandlabelthearrowswiththephysicaldocument/informationthatisbeingsentorreceived
o 6.Identifyanydatastoresthatareaccessedtogetdataortostoredataaspartoftheprocess.Thesemaybepaperbasedorelectronic
• Drawthesedatastoresinandlinkthemtotheentitythataccessesthembyincludingdataflowarrows
