Concepts in Enterprise Resource Planning, 4th edition 1-1
Chapter 1 (8/12/2020 – Tue W3)
Business Functions and Business Processes
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%20processes%20instead,organization%20from%20the%20customer's
%20perspective.&text=Financial%20accounting%2C%20cost%20allocation%20and,4.
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Chapter Exercise:
1. Distinguish between a business function and a business process. How might a manager
organize his or her staff in terms of business processes rather than functional
departments?
A business function is a business “activity”, such as sales order processing, production
scheduling, cash-flow management, and recruiting personnel. A business process is a
collection of activities that takes one or more kinds of input and creates an output that is of
value to the customer.
A business process occurs when a series of activities are performed in more than one
functional area. Making and selling a product to a customer is a process that involves sales,
production, and accounting activities. The people who work in each activity must work
together to make the sale go smoothly – taking the order, scheduling production, shipping
the product, recording data about production and sales and the ultimate collection of the
customer’s payment.
Today, business managers try to think in terms of business processes that integrate the
functional areas, thus promoting efficiency and competitiveness. An important aspect of
this integration is the need to share information between functional areas, and with business
partners. ERP software provides this capability by means of a single common database.
2. How could a university organize its business education around business processes
rather than business functions? What would be the benefits to students?
If a university organized its business education around business processes rather than
business functions, it will allow them to implement relevant knowledge which is necessary
for the positions of management and leadership which can essentially use the knowledge of
the processes that a company performs to reach its mission and utilize the ability to
micromanage all the processes themselves. As a relevant factor, we can consider that a
business’ function is its structural unity as well as the tasks it performs but a process is
rather simplified in its understanding. It can allow a basic understanding of the processes
more efficiently, in a broken-down structure to allow the curriculum to be designed in a
Concepts in Enterprise Resource Planning, 4th edition 1-2
manner which can be better received by the students. They would not only gain the
knowledge of what a company does but, how it does it too. (not accurate)
3. Discuss the advantages and disadvantages of grouping staff according to business
function.
A business function is a business
"activity,” such as sales order
processing, production scheduling,
cash-flow management, and
recruiting personnel. A business
process is a collection of activities
that
takes one or more kinds of input
and creates an output that is of
value to the customer.
A business process occurs when a
series of activities are performed
in more than one functional area.
Concepts in Enterprise Resource Planning, 4th edition 1-3
Making and selling a product to a
customer is a process that involves
sales, production, and accounting
activities. The people who work in
each activity must work together
to make the sale go smoothly -
taking the order, scheduling
production, shipping the product,
recording data about production
and
sales and the ultimate collection of
the customer's payment.
Today, business managers try to
think in terms of business
processes that integrate the
functional
Concepts in Enterprise Resource Planning, 4th edition 1-4
areas, thus promoting efficiency
and competitiveness. An
important aspect of this
integration is the
need to share information between
functional areas, and with
business partners. ERP software
provides
this capability by means of a
single common database.
The better a company can
integrate the activities of each
functional area, the more
successful it will be
in today’s highly competitive
environment. Integration also
Concepts in Enterprise Resource Planning, 4th edition 1-5
contributes to improvements
in
communication and workflow.
Each area’s information system
depends on data from other
functional
areas.
3. How could a university
organize its business education
around business processes rather
than
business functions? What would
be the benefits to students?
If a university organized its
business education around
business processes rather than
business function
Concepts in Enterprise Resource Planning, 4th edition 1-6
it will allow them to
implement relevant knowledge
which is necessary for the
positions of
management and leadership which
can essentially use the knowledge
of the processes that a company
performs to reach its mission and
utilize the ability to micromanage
all the processes themselves. As a
relevant factor, we can consider
that a business’ function is its
structural unity as well as the tasks
it
performs but a process is rather
simplified in its understanding. It
can allow a basic understanding of
Concepts in Enterprise Resource Planning, 4th edition 1-7
the processes more efficiently, in a
broken down structure to allow
the curriculum to be designed in a
manner which can be better
received by the students. They
would not only gain the
knowledge of what
a company does but, how it does it
too.
4. Define integrated information
systems, and explain why
they are essential in today’s
globally
competitive business environment.
Information systems that are
designed so functional areas share
Concepts in Enterprise Resource Planning, 4th edition 1-8
data are called integrated
information
systems.
1. Operational Excellence –
businesses can constantly improve
their efficiency of their operations
in
order to achieve higher
profitability. They can do this by
constantly having the correct
amount of
stock in store so consumers can
always get want they want.
A business function is a business
"activity,” such as sales order
processing, production scheduling,
Concepts in Enterprise Resource Planning, 4th edition 1-9
cash-flow management, and
recruiting personnel. A business
process is a collection of activities
that
takes one or more kinds of input
and creates an output that is of
value to the customer.
A business process occurs when a
series of activities are performed
in more than one functional area.
Making and selling a product to a
customer is a process that involves
sales, production, and accounting
activities. The people who work in
each activity must work together
to make the sale go smoothly -
Concepts in Enterprise Resource Planning, 4th edition 1-10
taking the order, scheduling
production, shipping the product,
recording data about production
and
sales and the ultimate collection of
the customer's payment.
Today, business managers try to
think in terms of business
processes that integrate the
functional
areas, thus promoting efficiency
and competitiveness. An
important aspect of this
integration is the
need to share information between
functional areas, and with
Concepts in Enterprise Resource Planning, 4th edition 1-11
business partners. ERP software
provides
this capability by means of a
single common database.
The better a company can
integrate the activities of each
functional area, the more
successful it will be
in today’s highly competitive
environment. Integration also
contributes to improvements
in
communication and workflow.
Each area’s information system
depends on data from other
functional
areas.
Concepts in Enterprise Resource Planning, 4th edition 1-12
A business function is a business
"activity,” such as sales order
processing, production scheduling,
cash-flow management, and
recruiting personnel. A business
process is a collection of activities
that
takes one or more kinds of input
and creates an output that is of
value to the customer.
A business process occurs when a
series of activities are performed
in more than one functional area.
Making and selling a product to a
customer is a process that involves
sales, production, and accounting
Concepts in Enterprise Resource Planning, 4th edition 1-13
activities. The people who work in
each activity must work together
to make the sale go smoothly -
taking the order, scheduling
production, shipping the product,
recording data about production
and
sales and the ultimate collection of
the customer's payment.
Today, business managers try to
think in terms of business
processes that integrate the
functional
areas, thus promoting efficiency
and competitiveness. An
important aspect of this
integration is the
Concepts in Enterprise Resource Planning, 4th edition 1-14
need to share information between
functional areas, and with
business partners. ERP software
provides
this capability by means of a
single common database.
The better a company can
integrate the activities of each
functional area, the more
successful it will be
in today’s highly competitive
environment. Integration also
contributes to improvements
in
communication and workflow.
Each area’s information system
Concepts in Enterprise Resource Planning, 4th edition 1-15
depends on data from other
functional
areas.
Advantages:
- Specialization
The most obvious advantage of a functional organization is that grouping employees by
specialization ensures a dependable level of departmental competence.
- Operational clarity
Segregating the workforce according to function clarifies organizational responsibility and
allocation of tasks. This tends to eliminate duplication of assignments that waste tine and effort
and makes it easier for management to direct work to appropriate employees.
Disadvantages:
- Lack of coordination
As communication becomes increasingly dominant in organizations, isolated groups may
underperform or even fail because they have no institutionally recognized way of
communicating needs and issues to other functional groups that might have helped.
- Segregation
Having departments populated by employees specializing in specific work areas means that
teams become isolated, employees in different teams do not get the opportunity to meet and
share perspectives, which can be harmful for the progress of the business in the long run.
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