Chapter 7

 In Chapter Questions 

  Amazon.com has grown exceptionally over the years. It is one of the world’s largest retailers in e-books, computer, video games, music and DVDs. Amazon.com also provides a cloud network for start-up companies. Managing all these departments can be very difficult but amazon has implemented an enterprise-wide information system to help with the easy flow of information throughout their b uusiness. Without this flow of information, amazon.com would be unable to be as efficient and productive as they currently are.
 * 1) How have enterprise-wide information systems enabled Amazon.com’s strategy?

  As stated in the readings the greatest disadvantage of providing Web services to smaller enterprises is that Amazon.com can incur huge costs and diverts the company’s resources away from its primary tasks. The biggest pro to this investment is that it maximizes the full use of its sophisticated IS infrastructure. This investment also generates a lot of revenue for Amazon.com and also acts as an advertising tool for Amazon.com.
 * 1) For Amazon.com, what are the pros and cons to providing Web services to assist smaller enterprises?

  Amazon differentiates itself from its competition by offering a large variety of products at their lowest possible price. It extensive database that tracks its purchases is also part of their differentiation strategy.
 * 1) In what ways does Amazon differentiate itself from other online marketplaces such as eBay?

 In Chapter Questions 2 

  Some other consumer products that require a complex value system are cell phones, gaming systems, and medical machinery.
 * 1) What other consumer products likely require a complex value system in order to be produced?

 
 * 1) Modern automobiles contain dozens of microprocessors, running over 100 million lines of software code. Have modern automobiles become too complex?

 In my opinion I do not think so because the world in constantly updating its technology. Consumers are also adapting to this technology so therefore if automobile does not continue to update its technology then it may be left behind. Since consumers are knowledgeable of these technological updates and are able to adapt to it, I believe that these complex automobile systems may not seem so complicated to most consumers.



 Review Questions 

 <p class="MsoNormal"> Core business processes are the processes which takes place from attaining raw materials up to actually selling the finish goods. These core business processes include order-to-cash, procure-to-pay, make-to-stock and make-to-order.
 * 1) What are core business processes?

<p class="MsoNormal"> <p class="MsoNormal"> Order-to-cash business process is associated with the selling of the product while procure-to-pay is associated with the acquisition of the raw materials from suppliers and make-to-stock/make-to-order is associated with the production of these goods. The definitions of the processes are as follows:
 * 1) Describe and contrast order-to-cash, procure-to-pay, make-to-stock, and make-to-order business processes.

<p class="MsoNormal" style="margin-left:1.0in;text-indent:-.25in;mso-list:l5 level1 lfo5"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol"> ·        Order-to-cash—the processes associated with selling a product or service

<p class="MsoNormal" style="margin-left:1.0in;text-indent:-.25in;mso-list:l5 level1 lfo5"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol"> ·        Procure-to-pay—the processes associated with procuring goods from external vendors

<p class="MsoNormal" style="margin-left:1.0in;text-indent:-.25in;mso-list:l5 level1 lfo5"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol"> ·        Make-to-stock—in this process goods are produced based forecasts and are stocked in a warehouse where sales orders are then fulfilled from.

<p class="MsoNormal" style="margin-left:1.0in;text-indent:-.25in;mso-list:l5 level1 lfo5"><span style="font-size:12.0pt;line-height:115%;font-family:Symbol;mso-fareast-font-family: Symbol;mso-bidi-font-family:Symbol"> ·        Make-to-order—Raw materials, subcomponents, and accessories are produced based on forecasts, but the actual manufacturing does not start until sales orders are received.

<p class="MsoNormal"> <p class="MsoNormal"> The core activities of a value chain are inbound logistics, operations and manufacturing, outbound logistics, marketing and sales, and customer service. Support activities include administrative activities, infrastructure, human resources, technology development, and procurement.
 * 1) What are the core and support activities of a value chain?

<p class="MsoNormal"> <p class="MsoNormal"> An example of upstream information flow may include information received from customers based on their taste and fashion whereas downstream information may include information passed from suppliers to organizations such as price of product and technology changes.
 * 1) Give an example of upstream and downstream information flows in a value system.

<p class="MsoNormal"> <p class="MsoNormal"> An enterprise system is an integrated suite of business applications for virtually every department, process, and industry, allowing companies to integrate information across operations on a company-wide basis using one large database. Enterprise systems has allowed companies to gain a competitive advantage by being able to integrate business applications whereas in the past business were not able to do so. In the past there was stand-alone applications and legacy systems which both were not able to integrate business applications. These systems led to a lot of disadvantages for the firms.
 * 1) Describe what enterprise systems are and how they have evolved.

<p class="MsoNormal"> <p class="MsoNormal"> Internally focused systems support functional areas, business processes, and decision making within an organization whereas externally focused systems coordinate business processes with customers, suppliers, business partners, and others who operate outside and organization’s boundaries.
 * 1) Contrast internally and externally focused systems.

<p class="MsoNormal"> <p class="MsoNormal"> The difference between customized and packaged software is that packaged software is written for the needs of many different users and organizations whereas customized software is written exclusively for the needs of a specific organization. The vanilla version refers to the natural features and modules the enterprise system comes with. The company will require a customized version if the vanilla version does not support their business process.
 * 1) Compare and contrast customized and packaged software as well as vanilla versions versus best practices—based software.

<p class="MsoNormal"> <p class="MsoNormal"> The core components of an ERP system are financial management, operations management and human resource management.
 * 1) What are the core components of an ERP system?

<p class="MsoNormal"> <p class="MsoNormal"> The company-wide database is one of the most important parts of an ERP system therefore setting up the database is key to a successful ERP implementation. Also organizations have to make countless decisions on how to configure hundredths of database tables to fit the business needs.
 * 1) What are the keys to successfully implementing an ERP system?

<p class="MsoNormal">

<p class="MsoNormal"> Self study 

<p class="MsoListParagraphCxSpFirst" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 1)      Enterprise systems are information systems that allow companies to integrate information and support operations on a company-wide basis.

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 2)      Which of the following is a core activity according to the value chain model?

<p class="MsoListParagraphCxSpMiddle">             Ans. Customer service

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 3)      According to the value chain model, which of the following is a support activity?

<p class="MsoListParagraphCxSpMiddle" style="text-indent:.5in"> Ans. Technology development

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 4)      All of the following are true about legacy systems except?

<p class="MsoListParagraphCxSpMiddle" style="margin-left:1.0in;mso-add-space: auto"> Ans. They are ERP systems

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 5)      The processes associated with obtaining goods from external vendors are referred to as procure-to-pay processes.

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 6)      The processes associated with selling a product or service are referred to as order-to-cash processes

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 7)      Which processes are most often associated with pull-based manufacturing of products?

<p class="MsoListParagraphCxSpMiddle" style="margin-left:1.0in;mso-add-space: auto"> Ans. Make-to-order processes

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 8)      Information system that focus on supporting functional areas, business processes, and decision making within an organization are referred to as internally focused systems

<p class="MsoListParagraphCxSpMiddle" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 9)      An enterprise system that has not been customized is commonly referred to as a vanilla version

<p class="MsoListParagraphCxSpLast" style="text-indent:-.25in;mso-list:l3 level1 lfo1"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 10)  Business process management is a systematic, structured improvement approach by all or part of an organization that critically examines, rethinks, and redesigns processes in order to achieve dramatic improvements in one or more performance measures, such as quality, cycle time or cost.

<p class="MsoNormal" style="margin-left:.25in">

<p class="MsoNormal" style="margin-left:.25in"> Problems and Exercises

<p class="MsoListParagraphCxSpFirst" style="text-indent:-.25in;mso-list:l4 level1 lfo2"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman""> 1. Match the following terms with the appropriate definitions:

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                          I.            Enterprise system- information systems that allow companies to integrate information on a company-wide basis

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                        II. Legacy systems- older systems that are not designed to communicate with other applications beyond departments boundaries

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                      III. Value system- a collection of interlocking company value chains

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                      IV. ERP extended components- components that support the primary external activities of the organization for dealing with suppliers and customers

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                        V.            Stand-alone application- systems that focus on the specific needs of individual departments

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                      VI. Vanilla version- the features and modules that a packaged software system comes with out of the box

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                    VII. Make-to-stock processes- goods are produced based on furcated demand

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                  VIII. Business process management- a systematic, structured improvement approach by all or part of an organization whereby people critically examine, rethink, and redesign business processes in order to achieve dramatic improvements in one or more performance measures, such as quality, cycle time, or cost.

<p class="MsoListParagraphCxSpMiddle" style="margin-left:75.0pt;mso-add-space: auto;text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                      IX. Procure-to-pay process- the process involved with acquiring goods from suppliers

<p class="MsoListParagraphCxSpLast" style="margin-left:75.0pt;mso-add-space:auto; text-indent:-75.0pt;mso-text-indent-alt:-.25in;mso-list:l6 level1 lfo3"><span style="font-size:12.0pt;line-height:115%;font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman"">                        X.            Internally focused systems- information system that support functional are, business processes, and decision making with an organization