Tutorial Questions: Chapter Two

1. Define TPS & DSS, and explain how an organisation can use these systems to make decisions and gain competitive advantages.
Transaction processing systems is a business system which handles the processing of financial transaction data. This system is used by the organizational level of an organisation. Transaction processing systems can include payroll systems, order entry systems or automatic teller machines. This system is extremely important within a business as it display significant business information which can be used for data mining. Data mining is a process which allows businesses to discover certain trends or patterns within the stored data and information. A transaction processing system provides a range of components which allow a business to create a competitive advantage against its competitors. The analysis of financial data provides an organisation with the opportunity to study data and discover ways to make the business more efficient and expand their profit margin.    
A decision support system has the ability to model information to support mangers and business professionals during the decision making process. Several models of a decision support system include: sensitivity analysis, what if analysis and goal seeking analysis. These models provide businesses with the opportunity to predict or determine how well the business will do within a certain point in time. These models provide an organisation with a competitive advantage as the professionals are more informed about the nature of the market and certain obstacles or opportunities which will prevail if the business chooses to make a decision.  
(Baltzan et al, 2010, pages 58&59)



Example of a Transaction Processing System

2. Describe the three quantitative models typically used by decision support systems.
The three quantitative models used typically by decision support systems include:  Sensitive analysis, what-if analysis and goal seeking analysis. Sensitivity analysis is the study of the impact that changes in one (or more) parts of the model have on the other parts of the model. Users change the value of one variable repeatedly and observe the resulting changes in other variables. What-if analysis, checks the impact of a change in an assumption on the proposed solution. E.g. a tool used in excel used to predict what will happen if a business chooses to carry out a decision. Goal-seeking analysis finds the input necessary to achieve a goal such as a desired level of output. This model sets a target value for a variable and then repeatedly changes other variables until the target value is achieved.
(Baltzan et al, 2010, page 59)


3. Describe a business processes and their importance to an organisation.
A business process can include, Human resources processes; the roles of this department include developing disabilities employment policies, employment hiring policies, health care benefits, resignations and termination and workplace safety rules and guidelines. This business process is significant to the operations of a business as this department handles any problems that may arise within the business, as well as representing the employees of the business and any events occurring within the organisation.
(Baltzan et al, 2010, page 70)


4. Compare business process improvement and business process re-engineering.
Improving business processes is paramount in order to stay competitive in today’s electronic marketplace. Organisations must improve their business processes because their customers are demanding better products and services, the business must keep up to date to keep their present customers and stops them buying products from other businesses. Business process improvement attempts to understand and measure the current process and make performance improvements accordingly. Business processes should drive technology choices, not the other way around. Businesses that choose technology and then attempt to implement business processes based on technology typically fail. This model contains processes which are designed to set a list of methods which are utilised to implement change effectively and efficiently in order to avoid system failure. 
Business process re-engineering is the analysis and redesign of workflow within and between enterprises. Compared to business process improvements, BPR relies on a different school of thought. In the extreme, BPR assumes that the current process is irrelevant, does not work, or is broken and must be overhauled from scratch.

(Baltzan et al, 2010, pages 71-73)

5. Describe the importance of business process modeling (or mapping) and business process models.

Business process modeling is the activity of creating a detailed flowchart or process map of a work process, showing its inputs, tasks and activities in a structured sequence. A Business process model is a graphic description of a process, showing the sequence of the process tasks, which is developed for a specific purpose and from a selected viewpoint. A set of one or more process models details the many functions of a system or subject area with graphics and text. Business process models are significant to a business as they: expose process detail gradually and in a controlled manner, encourages conciseness and accuracy in describing the process, focus attention on the process model interfaces and provides a powerful process analysis and consistent design vocabulary. A business process model can assist an organisation to illustrate several processes and use them to improve to process to make the business more user friendly and convenient.

(Baltzan et al, 2010, pages 78-79)

Interesting link: http://www.sparxsystems.com.au/business_process_model.html

(accessed 3/4/11)

Tutorial Questions: Chapter One

1. Explain information technology’s role in business and describe how you measure success.

It can be argued that information technology in an organisation acts as an ‘enabler’, in the sense that the processes of information technology allow the business faculties to operate effectively and efficiently. Information technology has the ability to connect the different areas of an organisation allowing it to be interdependent. For example, the sales department must attain specific information in order to understand the standings of the business; they must have access to inventory figures, expenses, the number of sales etc.

One can measure a success through ‘Key performance indicators’, specifically efficiency IT metrics and effectiveness IT metrics. Efficiency metrics measure only the performance of the information system through indicators such as, transaction speed and system availability. Whereas, the effectiveness metric measure the successes and/or failures of the IT system, for example usability and customer satisfaction.

2. List and describe each of the forces in Porter’s Five Forces Model.

The Porter’s Five Forces Model include: Buyer power, supplier power, threat of substitute products, threat of new entrants and rivalry among existing competitors.

Buyer power: refers to the influence of customers and their ability to impact the price when they are willing to pay for a certain item.

Supplier power: refers to the power of suppliers during certain circumstances. In some cases they have the ability to charge higher prices and limit quality or service when demand is high.

Threat of substitute products/services: the threat is high when there are many substitutes for a certain product and low when there a fewer products on the market.

Threat of new entrants: the threat is high when the market is easily penetrated by new competitors however, the threat is lower when there are more obstacles in entering the market.

Rivalry among competitors: rivalry between competitors is high when competition is fierce in a particular market and low when competition is much more subdued.

(Baltzan, et al, 2010 page 27&28)

3. Describe the relationship between business processes and value chains.

Businesses processes can be described as a set of actions that aim to accomplish a certain task; such as processing an online transaction or completing a customer’s order manually. The concept of a value chain involves the carrying out of businesses processes, each of which will add value to the particular product or service being offered by the organisation. In order to gain a competitive advantage the value chain must enable the business to provide a unique service compared to its competitors.

(Baltzan, et al, 2010 page 31&32)

4. Compare Porter’s three generic strategies.

Michael Porter had created a theory containing three generic strategies when a business is entering a market. The three strategies include: A broad cost of leadership, broad differentiation and a focused strategy. The broad cost leadership refers to a product or service that can be purchased at a lower cost compared to other brands, allowing for the product to be accessible by a wide consumer market. Whereas, broad differentiation refers to a product’s valuable difference compared to another product of the market. For example, a certain product may offer more entertaining features compared to other substitutions in the market, therefore making the product more valuable in the eyes of customers. A focused strategy refers to the availability of a product in a narrower market or niche market. An example may include a store selling items which are useful to those who are pregnant. This particular store is focused on providing an exclusive service which is only useful to a small market demographic.

(Baltzan, et al, 2010 page 30)

Interesting Link: http://thomasbarker.com/content/competitive-advantage

(accessed 3/4/11)