Solutions manual - systems th edition by Parkes, Olesen and Blount...

Solutions manual

to accompany

Accounting information systems

5 th edition

by

Parkes, Olesen and Blount

Prepared by Alison Parkes

© John Wiley & Sons Australia, Ltd 2017 Accounting Information Systems Understanding Business Processes 5th Edition Parkes Solutions Manual Visit TestBankDeal.com to get complete for all chapters

Chapter 2: Business processes

© John Wiley and Sons Australia, Ltd 2017 2.1

Chapter 2: Business processes

Discussion questions

2.1 Porter suggests that there are two main strategies businesses can adopt. Why is it not possible to adopt both at the same time?(LO1)

Porter’s argument that it is not possible to adopt more than one strategic position could be interpreted in a number of ways. Firstly, the organisation that tries to be all things to all people may end up confusing customers as to what they actually stand for or what they actually do best.

In the context of the material in this chapter, the argument can also be related to business process design. The link between business process and strategy is such that each strategy requires a differently configured set of activities in the business process. For example, the food preparation process for a fast food restaurant is going to be very different to that of a gourmet restaurant. An organisation that tries to adopt multiple strategies using the same business processes (i.e. choice of activities that they perform) runs the risk of having activities that are incompatible with their strategic position. Imagine a gourmet restaurant trying to adopt the processes followed by a fast food restaurant – they are clearly not compatible. Accordingly, Porter’s argument is such that strategy drives the choice of activities and process design and different strategies require different activities. Attempting to be everything to everyone is a dangerous position since the process design will not allow this.

2.2 What is meant by the term ‘operational effectiveness’?(LO1)

Operational effectiveness is, mentioned in the chapter, the ability to do things better than your competitors. In the context of the discussion about choices of activities within a process, it would seem he is talking about performing the chain of activities better than competitors.More generally, effectiveness refers to how well something is able to meet its purpose. For example, an automated mail system may be designed to place a stamp on the top right corner of an envelope, this being its purpose. If it malfunctions and places stamps in the lower left corner of the envelope it is not achieving its purpose – this makes it ineffective. In this sense, operational effectiveness could be seen as working towards the activities in the business achieving their intended purpose and doing this better than competitors.

Solutions manual to accompany: Accounting information systems 5e by Parkes et al.

© John Wiley and Sons Australia, Ltd 2017 2.2

2.3 What are the main components of an organisational strategy?(LO1)

Organisational strategy consists of (see chapter):

 Operational effectiveness – being able to do things better than your competitors and having activities in place that achieve the goals they are intended to achieve – i.e. they are effective. Uniqueness – A way of distinguishing an organisation from its competitors is to choose a unique set of activities that place the organisation apart from competitors. Trade-offs – A business cannot be everything to everyone – trade-offs will occur in the choice of products, delivery mode (i.e. physical or electronic), target market (youth, adult, senior). Fit – For the activities that are chosen for a business process, they need to be working towards the same end goal and complementing each other in achieving that goal. Sustainability – An organisation’s strategy and competitive advantage are seen as more sustainable if there are a larger number of unique activities that combine, since the larger number of activities makes it more difficult for competitors to duplicate in their entirety.

2.4 Describe the relationship between the mission statement, strategy and business processes.(LO1)

The relationship between the mission statement, business strategy and business processes is a cascading one. The mission statement sets out the overall purpose or objective that the organisation aims to achieve. From these overall objectives decisions needs to made about how the mission is to be enacted. This general decision about the enactment of mission comes through the selection of a strategy. The choice of strategy will then inform the decisions about the type of activities that get performed in the organisation – this being the decision about the design and operation of the business process.

2.5 Explain what it means for a business if it is considered an aggregator. What is unique about such a business’s operations?(LO1)

An aggregator is a business that operates by sourcing data from a range of sources and compiling it in a way that adds value for the end customer. The unique aspect about such businesses is that they are able to operate without offering a physical product or service – their business is information, driven by the data from business processes of other organisations.

Chapter 2: Business processes

© John Wiley and Sons Australia, Ltd 2017 2.3 2.6 Explain the difference between a strategy of cost leadership and differentiation.(LO1)

Cost leadership is a strategy that involves an organisation selecting activities with its process that minimise costs in the provision of the goods or services. Typically such strategies will see little choice or flexibility – for example standardised goods or services with little options for customisation, since customisation and flexibility add to the cost of production.

A differentiation strategy sees an organisation distinguish itself through greater attention to customer needs and individual customer requirements. It allows higher prices to be charged since such a strategy is stereotypically seen as being of higher quality.

A comparison of the two strategies brings out differences in:

 Flexibility in the resultant business processes. Focus of the strategy (cost management vs specialisation/customer attention). End price (cost leadership generally seen as cheaper).

2.7 Describe the differences between the functionally based and process-based organisation. How do these differences affect how the organisation operates?(LO2)

The functionally based organisation is designed around the concepts of a clear division of tasks, specialisation of labour and tight vertical control and coordination. The functional based organisation tends to focus more on what gets done – for example each functional division doing their specific task and specialising on that task. Such an organisational structure is hierarchically based. The process based organisation focuses more on how things are done. As a result it looks at how value is delivered to the end customer, emphasising the interaction between the different business functions, or a horizontal view of the organisation.

2.8 What are the organisational advantages and disadvantages of the functionally based and process-based organisational designs?(LO2)

The organisational benefits and disadvantages of the functional and process based organisational designs are summarised in the table below.

BENEFITS DISADVANTAGES

FUNCTIONAL Clear division of labour Vertical control Specificity of tasks Can be bureaucratic and cumbersome Communication problems / delays Information flows can be delayed Focuses on the wrong things Slow to react to change PROCESS Customer driven More efficient resource use possible Flexibility Less vertical control Change to process emphasis can create resistance