MODULE 3 : BUSINESS Dr. Dr.

Tam Nguyen

AND ITS SYSTEM

 CONTENTS
Organizational “terms”: Goal, objectives, strategy, business model,
business initiatives, business units.
Organization structure and environment
Organization and process
Business process management
BUSINESS IS A
SYSTEM?
ORGANIZATIO
N: GOALS
AND
OBJECTIVES
Goal—A general statement
of something executives
want to gather data about,
and a vector suggesting how
they hope the data will trend.
For example: increase profits.
Objective—We can contrast
a goal, like Increase Profits,
with an objective, which
might be: increase profits by
3% by the end of this year.
Objectives are more specific
than goals and not only
include a unit of measure and
a vector, but also include a
specific measurable outcome
and a timeframe.
 ORGANIZATION: STRATEGY
Strategy—A general statement
of how we propose to achieve
our goals. It is a long-term
plan that allocates how a
company plans to use its
resources to support business
activities. It serves as
guidance for how a company
can achieve its objectives.
For example: our strategy will
be to offer the best products
at a premium price

Business strategy is an
organizational
perspective on setting
and meeting business
goals. (Mintzberg)
 BUSINESS MODEL
A business model is another
way to speak about how an
organization will apply a
strategy (usually providing
more detail about how the
strategy will change the
organization or what
implementation of the strategy
will involve).
For some a business model
simply describes how a
company will operate. For
others a business model
involves a spreadsheet that
demonstrates how an
organization will apply labor
and technology to generate
profits over the course of time.
 BUSINESS
UNITS,
DIVISION AND
DEPARTMENTS
An organization usually
contains Business Units,
Divisions, and
Departments. An
organization is often
divided into business
units, which are composed
of divisions. Divisions, in
turn, are composed of
departments.
Not all organizations use
this three-level hierarchy,
and instead might have
just departments and
divisions.
 ORGANIZATION/
BUSINESS INITIATIVES
is a statement of an outcome
executives want the
organization to accomplish in
the near future.
Initiatives can sound very
much like objectives, except
that they tend to focus on
what business units or
people will do, rather than
results that will be achieved.
For example: all divisions will
install enterprise resource
planning (ERP) systems in the
coming year. Or, each unit will
reduce its expenses by 3% in
the coming year.
 EXERCISE 3.1
Find an organization and identify its terms
 ORGANIZATION/BUSINESS

AS A SYSTEM
Conceptualized as systems
designed to accomplish
predetermined goals and objectives
Composed of smaller, interrelated
systems serving specialized
functions
Specialized functions are
reintegrated to form an effective
organizational whole
 EXERCISE 3.2
10’ minutes exercise
Work with a classmate:
- Identify 2 departments/processes in an organization that have a
relationship with each other
- Identify input and output of these business units
 ORGANIZATION AND ITS
ENVIRONMENT
- Environments shape what
organizations can do
- Organizations can
influence their
environments and decide to
change environments
altogether
- Information technology
plays a critical role in
helping organizations
perceive environmental
change and in helping
organizations act on their
environment.
 ORGANIZATION AND
MANAGEMENT LEVELS
Influenced by levels of
management decision makers
that cut horizontally across the
organizational system
 Operations
 Middle management
 Strategic management

Influenced by organizational
cultures and subcultures
EXERCISE 3.3
15 minutes exercise
Form a group (3-4 students), pick a business that your group is
familiar with, and do the following:
- Identify 3 levels of management.
- Give at least 3 example of decision for each level of management
(beside examples in the figure)
HOW PEOPLE SEE
THE ORGANIZATION
- Each manager possesses a different
picture of the importance of his or her
own functional subsystem.
- Enterprise system, or enterprise
resource planning (ERP) system, is a
term used to describe an integrated
organizational (enterprise) information
system
ORGANIZAT
IONAL
DIAGRAM
ORGANIZAT
ION AND
ITS
PROCESS
BUSINESS PROCESS – SUB-
SYSTEM
A business process as a
collection of inter-related
events, activities, and
decision points that involve
a number of actors and
objects, which collectively
lead to an outcome that is
of value to at least one
customer.
• Actors, including human
actors, organizations, or
software systems acting on
behalf of human actors or
organizations.
• Physical objects, such as
equipment, materials,
products, paper
documents.
EXERCISE 3.4
Draw a business process with your classmate
 ADAM SMITH: PROCESS AND
DIVISION OF LABOUR
“To take an example, the trade of a pin-maker: But in the way in which this
business is now carried on, it is divided into a number of branches:
• One man draws out the wire; another straights it;
• a third cuts it; a fourth points it; a fifth grinds it at the top for receiving
the head; to make the head requires three operations; to put it on is a
peculiar business;
• to whiten the pins is another; to put them into the paper;

and the important business of making a pin is, in this manner, divided into
about eighteen distinct operations.”

Source: Smith 1776

Picture:
http://www.library.hbs.edu/hc/col
lections/kress/kress_img/adam_s
mith2.htm
 CONTINUOUS IMPROVEMENT
APPROACHES
BPM is a body of methods, techniques, and tools to identify, discover, analyze, redesign, execute, and monitor business processes in order to optimize their
performance.

TQM (Total Quality Management) is an approach that both historically preceded and inspired BPM. The focus of TQM is on continuously improving and
sustaining the quality of products, and by extension also of services.

Operation Management is a field concerned with managing the physical and technical functions of a firm or organization, particularly those relating to
production and manufacturing. Probability theory, queuing theory, decision analysis, mathematical modeling, and simulation are all important techniques for
optimizing the efficiency of operations from this perspective.

Lean is a management discipline that originates from the manufacturing industry, in particular from the Toyota Production System. One of the main
principles of Lean is the elimination of waste, i.e., activities that do not add value to the customer

Six Sigma focus on the minimization of defects (errors). Six Sigma places a strong emphasis on measuring the output of processes or activities, especially in
terms of quality. Lean +Six Sigma = Lean Six Sigma.
Purchasing process at Ford at the Purchasing process at Ford after
initial stage redesign

WHY WE NEED BUSINESS

PROCESS MANAGEMENT
EXERCISE 3.5 (PAGE 13 –
FUNDAMENTAL OF BPM)
Consider the purchasing process at Ford.
1. Who are the actors in this process?
2. Which actors can be considered as customers in this process?
3. What value does the process deliver to its customers?
4. What are the possible outcomes of this process?
THE BPM LIFECYCLES Process
Management Processes

Define Vision Develop Strategy Implement Manage Risk

Strategy

identification Core Processes

Procure Procure Market Deliver

Manage
Customer
Materials Products Products Products
Service

Support Processes

Process architecture Manage Personnel

Manage
Information Manage Assets

Conformance and Process As-is process

performance discovery model
insights

Process Process
monitoring analysis

Executable Insights on
process weaknesses and
model their impact

Process Process
implementation To-be process redesign
model

SEITE 25
 STAKEHOLDERS IN THE BPM
LIFECYCLE
Management Team: Process Owners:
 Chief Executive Officer (CEO) responsible for  Process owner is responsible for
overall business success.
efficient and effective operation of a
 Chief Operations Officer (COO) responsible given process, including
for defining the way operations are set up,
 Planning and organizing, i.e. defining
sometimes Chief Process Officer (CPO) or
Chief Process and Innovation Officer (CPIO). performance measures and objectives
 Chief Information Officer (CIO) responsible
as well as initiating and leading
for operation of information system improvement projects.
infrastructure.  Monitoring, i.e. ensuring that
 Chief Financial Officer (CFO) responsible for performance objectives are met, and
overall financial performance of the taking corrective actions.
company.
 Process owner is involved in process
 Human Resources (HR) director plays key
modeling, analysis, redesign,
role in processes that involve many process Slide 26
 STAKEHOLDERS IN THE BPM
LIFECYCLE
Process Participants: Process Methodologist:
 Perform activities of business process on  Provides advice on methods, techniques
day-to-day basis. and software tools.
 Conduct routine work according to the  Coordinates technical training.
standards and guidelines of the company.
 Coordinated by process owner, who is System Engineers:
responsible for non-routine aspects of  Translate requirements into system design
process.  Responsible for implementation, testing and
 Involved as domain experts during process deployment.
discovery and process analysis.
BPM Group (also BPM Center of Excellence):
 Support redesign activities and
 Responsible for preserving project
implementation.
knowledge and documentation.
Process Analysts:  Maintain process architecture.
 Conduct process identification, discovery,  Prioritize process redesign projects.
analysis, and redesign.  Align the BPM efforts with strategic goals.
 Coordinate implementation and monitoring.
 Most common in large organizations with
 Report to management and process owners several years of BPM experience.
 Have business or IT background. Slide 27
 RECAP
A process is a collection of events, activities, and decisions that
collectively lead to an outcome that brings value to an
organization’s customers.
Every organization has processes.
Managing processes ensures that they produce value.
BPM is a body of principles, methods, and tools to design, analyze,
execute, and monitor business processes.
HOMEWORK? OF COURSE!
 DISCUSSION TOPIC Topic Group

-Pick one 1. Work specialization – To what degree should work tasks in an

organization be subdivided into separate jobs? How well should these jobs
1
of the be defined?
2
following 2. Hierarchy – Should there be many layers of management (tall hierarchy)
or few (flat hierarchy)? What are the implications in terms of
and communication, employees’ motivation and staff costs?
3
prepare 3. Span of Control – How many subordinates should a single manager /
supervisor be responsible for?
for the 4
next class 4. Chain of command – To whom should a given individual or group report
with respect to their work? Should there be unity of command? 5
discussion
. 5. Departmentalization – Should jobs be grouped within departments 6
whose staff share a common expertise (functional); or according to the
- product or service they offer, the geographical area they operate in, the
Remembe type of customer they serve, or some other basis?
6. Formalization – To what degree should written rules, operating 7
procedures, job-descriptions, organizational charts, and formal, written
r to give communication be used?
example 7. Centralization – Should decisions be made at the top of the company or
and should decision making be delegated to the lower managers in the
organizational hierarchy? – Advantages and disadvantages