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Chapter 3

ITM 102 Chapter Notes - Chapter 3: Business Process Reengineering, Business Process, Competitive Advantage

Information Technology Management
Course Code
ITM 102
Ross Mc Naughton

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Chapter 3 - Creating Business Value
Business Organization and Business Processes
-A company need a business strategy.
-Strategy is a broad based formula for how a business is going to compete, what its
goals should be, and what plans and policies will be needed to carry out those goals.
-If the industry is attractive and has few barriers, more competitors will enter the indus-
try thus increasing competition.
-If the there are barriers, then it will be harder for new competitors to join the industry.
Businesses as Open Systems
-Open systems model indicates that business operates by transforming inputs into out-
puts and by constantly interacting with its environment.
Stakeholders and Boundaries in the Business Environment
-A stakeholder is a person or entity that has interest in and an influence on how a busi-
ness will function in order to succeed.
-May be external or internal relative to the system.
-Organizational boundary shows business operates by transforming inputs into outputs
and by constantly interacting with its environment.
-A business needs external information to run its operations or processes on a daily ba-
How Businesses Organize to Create Value
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Chapter 3 - Creating Business Value
-All business organizations possess structures that organize information, responsibility,
and authority.
-When used appropriately, organizational structure helps get the job done.
-When misused, organizational structure can grow to an unmanageable size and densi-
ty and can create a bureaucracy that seems to inhibit rather than facilitate productive
-Functional and decentralized structures, the lines of authority and communication are
vertically oriented.
-Matrix structure blends the functional and decentralized organizational structures.
-A business might used a matrix structure to take advantage an of the strengths, as well
as make up for the weaknesses of functional and decentralized forms.
Business Process
-To transform inputs to their main outputs, organizations need to perform a series of
step known as a business process.
-Defined as a collection of activities that takes one or more kinds of input and creates
an output that is of value to the customer.
-Input ---> Process ---> Output
-A process receives inputs, undertakes some action, and then produces outputs.
-Inputs to a process are those resources needed to start a process.
-Guides are rules or policies within which a process must operate.
-Outputs are the results of a process.
-Enablers are a special kind of input or resource that facilitates a process.
-Feedback is a special kind of measurement created by a business process that is then
retuned to the system to control the system’s future inputs, processes, and outputs.
-Businesses use feedback to monitor the efficiency and effectiveness of a given
-Business process reengineering (BPR) is the study of business processes to find ways
of making them more efficient.
-BPR goals are to reduce costs, increase throughput and speed, and increase quality
and service.
Defining Competitive Advantage
-Continuous improvement is the hallmark of successful enterprises, those that are nev-
er satisfied with good enough, but strive to to set new standards and benchmarks.
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