Week 3: Strategic Decision Making

Define TPS & DSS, Provide Some Examples Of These Systems In Business

TPS and DSS are two types of decision-making information systems commonly used in business. A TPS, or Transaction Processing System, is a basic business system that facilitates organisational activities at the operational level. The most common example of a TPS found in business is payroll systems, order-entry systems, Credit Card Authorisation and EFTPOS Online Bill Payments.

In comparison, a DSS refers to a Decision Support System. These systems model information to support an organisation’s management through their decision-making process. In this way, a DSS system can be used in conjunction with a TPS to predict and achieve a business’s longer term strategy and goals. For this reason, some examples of a DSS include Business Intelligence Systems like Oracle and Executive dashboards that display all relevant information to the organisation’s decision makers.


Describe The Three Quantitative Models Typically Used By Decision Support Systems

Decision Support Systems, commonly use 3 quantitative models to achieve their aim. These three models are known as;

• Sensitivity Analysis
• What-If Analysis
• Goal-Seeking Analysis

Sensitivity Analysis is that which measures the impact to a model when changes are made to one or more parts of it. This is usually accomplished by the operator of the system  repeatedly changing the values of one or more of the variables and observing the resultant effect on the rest of the model.

Similarly, a What-If Analysis also measures the impact of changes in models. Instead of just determining how sensitive the model is to changes however, this model measures the exact effect. For example, a commonly used application of What-If Analysis is to determine a business’s different break-even points depending on varying amounts of sales and/or expenses.

In comparison to these two models that measure the end results of inputs, the Goal-Seeking Analysis model works backwards from the finished product to determine the inputs necessary to achieve such a goal. It does this by setting a target value or goal for a variable, such as desired sales and then repeatedly making changes to others until the desired outcome is achieved.

Describe Business Processes And Their Importance To An Organisation. Outline An Example Of How They Are Used

A Business Process is a set of standardised activities or steps that are used to accomplish a specific task. In essence, they are those systems put in place within a business that transform a collection of inputs into an output such as a good or service. The ultimate success of an organisation is intrinsically linked to the business processes it has in place. In order to satisfy their customers and increase their profits, an organisation’s decision makers must understand and constantly monitor their business processes. In this way, business processes have the power to help an organisation achieve their goals, and in recent times many organisations have turned to automation to stay competitive and increase efficiency.

For example, in supermarkets the ‘checkout’ process is a clear use of business processes within an organisation. In this instance, the process involves all the steps both the customer and store personnel undertake to complete the transaction. As seen in the diagram below, the checkout ‘process’ begins when the customer gets into line and ends when they receive the receipt for their purchases. Retail stores such as K-Mart which have begun integrating automated self-serve check-out systems to this process, are also examples of how organisations can work to improve these processes.

Compare Business Process Improvement And Business Process Re-Engineering

Business Process Improvement is when the decision makers in an organisation attempt to understand and measure the current business process that is in place and make any necessary improvements. In order to do this there is a cycle of 5 basic steps that are followed. These steps are;

·    Documenting the way the system currently works

·    Establishing a way to measure the process

·    Following the Process

·    Measuring the Performance

·    Identifying and Implementing Improvements

In this way, Business Improvement is an effective way to implement gradual and incremental improvement to an existing process, for example, many businesses today have adapted their inventory system from pen/paper records to electronic scanning.

Re-engineering on the other hand, refers to when a process is made to be totally redundant and so, is re-engineered to suit and model new technology. Unlike, Improvement, it assumes that the system currently being used is unnecessary or inefficient and as such should be overhauled and recreated from scratch. In this way the basic steps of Business Process Re-Engineering include;

·    Setting the Project Scope

·    Studying the Competition

·    Creating New Processes

·    Implementing the Solutions

Describe The Importance Of Business Process Modelling (Or Mapping) And Business Process Models 

As the use of technology becomes more and more common in business, the importance of business process modelling and business process models will increase. Unlike in the past, when managers could easily improve their processes purely through observation, in today’s high-tech business environment, they are increasingly becoming invisible.

For this reason, Business Process Modelling or Mapping has become extremely necessary. Involving the creation of a detailed flowchart or map of the inputs, tasks and activities within a structured sequence, Business Process Mapping, creates a graphic description of a process in the form of a Business Process Model.

These models can take the form of either an As-Is Process Model, or To-Be Process Model. Where an As-Is Model represents the process as it is now, the To-Be model illustrates the results of applying possible improvements. In this way, the creation of a Business Process Model can be used in business to both clarify the present situation and express  the vision for improvement.

Week 2: Information Systems In Business

Explain Information Technology’s Role In Business?

Information Technology plays a ‘support’ role in business. In short, it is an enabler – connecting each department and facilitating communication and data transfer. In today’s dynamic business environment the achievement of an organisation’s broad strategic goals greatly depend on their ability to undertake company-wide initiatives. Information technology supports the implementation of these initiatives by facilitating interdepartmental communication. It can do this, through services such as instant messaging and wireless broadband which allow workers to communicate in faster and more efficient ways.

For this reason, when information technology is successfully embedded within an organisation it has the ability to;

·         Reduce Costs

·         Improve Productivity

·         Generate Growth

What Are Efficiency And Effectiveness Metrics? Provide Some Examples Of Each.

The establishment and maintenance of developing an extensive IT system can cost a business huge expenditure. For this reason, businesses use Efficiency and Effectiveness IT metrics to measure the payoff, impact, and value gained from types of technology, and justify the expenditure.

Efficiency Metrics are measurements of  the IT system itself, such as throughput, speed and availability. In this way, metrics that measure efficiency are focused on the extent to which the organisation is using its technology to get the optimal performance from each resource.

Effectiveness Metrics are measurements of the impact the IT system in question has on the business and its processes and activities. Looking at measurements of things such as customer satisfaction, usability and conversion rates this type of metric is focused on how the technology is assisting the organisation to achieve its objectives and goals.

What does Porter’s Five Forces Model attempt to explain? How does the internet affect the model?

Michael Porter’s Five Forces Model attempts to explain how an industry’s relative attractiveness can be impacted by competitive forces such as;

      ·         Buyer Power

 

 

      ·         Supplier Power

 

 

      ·         Threat of Substitute Products/Services

 

 

      ·         Threat of new Entrants

 

 

      ·         Rivalry Among Existing Competitors

According to this model, the existing rivalry among competitors is at the centre of any industry and a company’s sales can be negatively affected by;

·         Knowledgeable Customers using their Buying Power to pit rivals against each other in order to force down prices

·         Suppliers with significant influence and power driving down profits by charging higher prices for supplies

·         New Entrants stealing potential investment capital from existing companies

·         Customers being stolen or lured away by substitute products.

As the internet continues to be used in business services and transactions Porter’s model will continue to evolve in order to incorporate the impact the worldwide web threatens to have on business. In today’s dynamic, technologically savvy business environment each of the Five Forces in Porter’s model are affected by the internet. For example, with the advent of internet shopping, buyers now have more power than ever before, with the ability to quickly and efficiently compare prices and take their business overseas and interstate when local offerings do not fit their needs. In this way the threat of new entrants and the threat of substitutes have also been magnified as a result of the internet. Now instead of only competing with stores in the nearby area, businesses face the threat of overseas companies such as Aldi, Coca-Cola and McDonald’s entering their country’s market and stealing potential capital and customers. Similarly, many suppliers have now begun utilising technological systems to more effectively and efficiently manage and distribute their stock, allowing them to reduce their costs and give them more power in the marketplace.

Describe The Relationship Between Business Processes And Value Chains?

The two concepts of business processes and value chains are intrinsically linked. The term business processes refers to a standardised set of activities that accomplish a specific task, and the Value Chain is the way in which these processes build on each other to add value to the finished product or service for each customer. In this way, in today’s fast-changing business environment organisations are being forced to continually perform one or more business processes in the form of a value chain to create more overall value for consumers than their competitors.