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Lecture 7

BUS 237 Lecture Notes - Lecture 7: General Ledger, Business Process, Financial Statement

Business Administration
Course Code
BUS 237
Albert Seah

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Oct 24 Lecture 7
Competitive Advantage and Business Processes
o Changing the Product: by introducing new products or services
or enhancing current products or services
o Business Processes: organizations use technology to help lock-in
customers, lock-in suppliers, reduce costs, form alliances, and
create entry barriers for competitors in the market
How IS can affect competitive advantage
o By making the primary and support activities in an organization
more productive than those of competitors
o Increased productivity is realized when business processes
within the organization become more effective and more
o True for commercial companies as well as for non-profit
organizations and government
Business Functions and Functional Systems
o Reorganized Porter Value Chain Model shows the scope and
purposed of different types of information systems within the
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Value Chain Activities
o Primary Activities: relate directly to orgaizatios custoers
and products
Marketing and sales
Inbound logistics
Operations and manufacturing
Outbound logistics
Service and support
o Facilitated by support Activities
Human resource
Accounting and infrastructure
Technology activities
Functional Systems: facilitated the work of single department or
o Functions added to calculation system programs to provide
more value
Payroll expanded to become human resources
General ledger became financial reporting
Inventory was merged into operations and manufacturing
o Companies added features and capabilities to information
systems to support more functional-area activity
Functional Silos and Cross-Functional Systems
o Functional Silos: systems designed to work independently of
one another
o Functional systems are inter-related in reality
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o Purchasing influences inventory, which influences production,
while influences customer satisfaction, which influences future
o Decisions that are appropriate for only single business function
may be inefficient for an entire business process
Integrated, Cross Functional Systems
o Cross-departmental systems operate across departmental
o Transition from functional systems to integrated cross-functional
systems is difficult
o Integrated processing needs many departments to coordinate
o Inter-organizaitional systems are cross-functional systems used
by two or more related companies
o Most organization today have a mixture of functional and
integrated systems
Functional System
Flaw: functional
EAI enterprise
ERP enterprise
resource planning
Creates a
database to be shared
across all
SCM supply
chain management
Why are functional Systems Changing?
o Functional systems provide tremendous benefits, but are limited
because they operate in isolation
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