Week 3 Questions - Strategic Decision Making (chapter 2)

Weekly Questions - Strategic Decision Making
Chapter Two Questions:

1. Define TPS & DSS, and explain how an organisation can use these systems to make decisions and gain competitive advantages
A transaction processing system (TPS) is the essential business system that serves the operational level (analysts) in an organization. These systems involve elementary business activities, such as sales, receipts, cash deposits, payroll, credit decisions and flow of materials (Business driven information systems, Baltzan.) A TPS differs to a decision support system (DSS) as a DSS models information to support managers and business professionals during the decision-making process. A business can uses TPS to help them make decisions by focusing more on meaningful aggregations of information which will help the business make broader decisions. An organisation can adopt OLAP to create business intelligence in support of strategic decision making which will help them gain a competitive advantage in comparison to the market. DSS also help businesses make critical decisions by undertaking some quantitative models; these include sensitivity analysis which studies the impact of changes in models, also a what-if analysis which assess the impacts of assumptions and lastly, a goal seeking analysis which finds the inputs necessary to achieve a goal. Whilst undertaking these analysis’s the business can gain a competitive advantage by being able to make critical decisions and cut costs and avoid costly decisions.

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2. Describe the three quantitative models typically used by decision support systems.

Three quantitative models usually used by DSS include the following:
1. Sensitivity analysis: The study of the impact that changes in one or more parts of the model have on other parts of the model. It is basically used to determine how sensitive a model is to changes in the structure of the model.
2. What-if analysis: the impact of a change in assumption on the proposed solution. Therefore this analysis tests the direct effects of adopting a business strategy (http://www.smallbiz.nsw.gov.au/run/financecashflow/tool/Pages/whatif.aspx)
3. Goal-seeking analysis: Finds the inputs necessary to achieve a goal such as a desired level of output. it provides an evaluation of the changes you are considering to achieve a higher level of business performance. (http://www.smallbiz.nsw.gov.au/run/financecashflow/tool/Pages/goalseekanalysis.aspx)

3. Describe a business processes and their importance to an organisation.

A business process is a standardized set of activities that accomplish a specific task, such as processing a specific task. It is based on the manner of which work is organised, coordinated and focused to produce a valuable good or service. By understanding their business processes an organization can satisfy customers and increase their profits. This is important so businesses can remain competitive and continue to optimize and automate their business processes. Organisations are only as effective as their business processes. Example of business processes include, human resources processes, environmental business processes and accounting/finance processes.

4. Compare business process improvement and business process re-engineering.

Business process improvement attempts to understand and measure the current process and make performance improvements accordingly. Improving business processes is effective in obtaining steady incremental improvement. Many organizations begin process improvement with a continuous improvement model. However, this differs to Business process reengineering as it assumes it current process is irrelevant, does not work or is completely broken and must be overhauled from scratch. BPR concerns itself with improving the experience for the company and sets new standards throughout the industry. Therefore, BPR is the analysis and redesign of workflow within and between enterprises.

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 work process, showing its inputs, tasks and activities in a structured sequence. The purpose of a process model is to:
· Expose process detail steadily and in a controlled approach
· Encourage conciseness and accuracy in describing the process model
· Focus attention on the process model interfaces
· Provide a powerful process analysis and consistent design vocabulary.

Example of a process model:

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Therefore the above purposes and aim stress the importance of such models, as they provide for accuracy and minimal mistakes that are costly to the business. Therefore the models allow the business to gain a competitive advantage.