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Chapter 2: Business processes
Multiple-choice questions
1
...

(ii) The external level
...

(iv) The inter-organisation level
...

(vi) The competitive level
...

*b
...

d
...
1 – identify and interpret the components of organisational strategy and
mission
...


An example of a strategic level decision would be:
a
...

c
...


determining the quantity of raw materials to purchase
...

reconfiguring the production line design to eliminate wasted time due to
bottlenecks
...


Correct answer: d
Learning objective 2
...


Chapter 2: Business processes

3
...

These two options are:
a
...

c
...


economies of scale and entry barrier
...

price competition and product abundance
...


Correct answer: d
Learning objective 2
...

4
...
Which of the following is NOT one of the steps?
a
...

*c
...


Fit
...

Operational efficiency
...


Correct answer: c
Learning objective 2
...

5
...
Which of the following is NOT one of the forces?
a
...

c
...


Threat of new entrants
...

Rivalry among existing competitors
...


Correct answer: b
Learning objective 2
...

6
...

b
...

d
...

internal and external
...

scientific and practical
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...
1

7
...

b
...

d
...

developed highly interactive and flexible structures that could easily adapt to
changing environments
...

streamlined the information flows across the organisation
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...


Scientific management is concerned with:
a
...

*c
...


streamlined work flows across the organisation
...

clearly defining individual employee’s responsibilities and tasks
...


Correct answer: c
Learning objective 2
...

Learning objective 2
...

9
...

b
...

d
...

Stability
...

Task specificity
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...
2

Chapter 2: Business processes

10
...

*b
...

d
...

Lack of administrative power
...

Focuses on the wrong things
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...


An emphasis on business processes is different to a functional perspective of the
organisation because a business process emphasis:
a
...

*c
...


offers highly defined tasks and responsibilities
...

acknowledges cross-functional communication and action is essential to the
customer’s needs
...


Correct answer: c
Learning objective 2
...

12
...

b
...

d
...

Any activity performed by a business
...

Any activity performed by a manufacturing company providing that it
produces a profit
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...
3

13
...

b
...

*d
...

business process personnel are highly skilled specialists, business function
personnel are generalists operating across numerous areas
...

business processes are customer driven, business functions are task driven
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...


A sales person is processing a credit sale
...
This scenario is more likely to happen in:
*a
...

c
...


functionally based organisation
...

both functionally based organisation and business process based organisation
...


Correct answer: a
Learning objective 2
...

15
...

b
...

d
...

Greater efficiency and effectiveness in using resources
...

Less non-value-adding activities
...
4 – appraise the benefits of organisations adopting a business process
perspective
...
4

Chapter 2: Business processes

16
...

b
...

d
...

reduce bureaucracy
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identify tasks and functions that do not add value
...
4 – appraise the benefits of organisations adopting a business process
perspective
...


Business processes can provide an organisation with a competitive advantage
...

*b
...

d
...

the design of business processes that are unique or offer something different
...

the design of business processes that have lower costs of execution
...
4 – appraise the benefits of organisations adopting a business process
perspective
...


The business process can yield benefits for an organisation through:
a
...

c
...


ignoring customer service and focussing on superior product design
...

outsourcing all customer service activities
...


Correct answer: d
Learning objective 2
...


2
...


Although ERP systems are built around the idea of best practice, some organisations
will choose not to adopt the ERP best practice, seeking instead to modify the design
of the system
...

b
...

d
...

the ‘fit’ between the system and the business processes needs to exist
...

the ERP system is unable to drive some of the organisation’s unique business
processes that provide distinct competitive advantage to the organisation
...


Correct answer: c
Learning objective 2
...

20
...

b
...

d
...

developed around an information silo principle
...

suitable for both large and small organisations
...
5 – critically evaluate the role enterprise resource planning (ERP)
systems play in business process design
...


Because of ERP’s best practice approach, if all organisations adopt the ERP system
and have the same underlying processes, they are less likely to distinguish themselves
and gain a competitive advantage
...

b
...

*d
...

adopting ERP before competitors do
...

not configuring a business process around an ERP system
...
5 – critically evaluate the role enterprise resource planning (ERP)
systems play in business process design
...
6

Chapter 2: Business processes

22
...

b
...

d
...

Functional barriers are broken down
...

Employee resistance
...
6 – interpret and communicate issues for organisations changing to a
process-based focus
...


The first stage in adopting a business process perspective is that:
a
...

c
...


it should focus on removing middle management
...

it should emphasise the flattening of the organisational structure
...


Correct answer: b
Learning objective 2
...

24
...
This is a likely description of:
a
...

*c
...


employee empowerment
...

a business process oriented environment
multi-tasking
...
6 – interpret and communicate issues for organisations changing to a
process-based focus
...


The first stage in adopting a business process perspective is:
a
...

c
...


securing customer approval
...

ensuring that the company is currently using updated technology
...


Correct answer: d
Learning objective 2
...


2
...


An organisation is undergoing a major change to the way it does business, redesigning
business processes and the use of IT within the processes
...
In this case:
a
...

c
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TQM would be ideal because it allows for all employees to offer suggestions
and be involved in the changing of the organisation
...

TQM would not be ideal because its incremental approach would mean that
change would take a large amount of time
...


Correct answer: d
Learning objective 2
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27
...

b
...

*d
...

decisions that require specialists are removed from a process
...

jobs are combined and key workers are given decision making responsibility
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


Which of the following statements is NOT true about a reengineered process?
a
...

*c
...


Jobs change and people are empowered
...

Controls are increased to ensure smooth functioning
...


Correct answer: c
Learning objective 2
...


2
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Benefits of a reengineered process from a customer’s perspective do not include:
a
...

c
...


better information availability
...

a specific reference point
...


Correct answer: d
Learning objective 2
...

30
...

b
...

*d
...

all business processes are computerised
...

the use of IT is driven by business needs and opportunities
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


Evaluated receipts settlement involves:
*a
...

c
...


the purchaser paying for goods without receiving an invoice
...

speeding up the accounts receivable process for a vendor
...


Correct answer: a
Learning objective 2
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32
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Someone suggested that they continue to send out paper invoices but allow customers
to pay through their bank website and phone banking
...

b
...

d
...

electronic bill presentment and payment
...

neither electronic bill presentment nor payment
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...
9

33
...

b
...

d
...

a leadership team consists of company executives should be established to
guide the project
...

the leadership team members need not be of authority sufficient
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


In terms of BPR:
a
...

c
...


job descriptions need not be adjusted
...

once improvements are consolidated, further change should be avoided so that
achieved improvements can be sustained
...


Correct answer: b
Learning objective 2
...

35
...

*b
...

d
...

Perform process steps in a functionally logical order
...

Reduce the impediment of controls and reconciliations
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


People within the organisation need to be encouraged to provide feedback about the
design of a process
...

b
...

d
...

at the line manager level of the organisation
...

at the executive level of the organisation
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...
10

Chapter 2: Business processes

37
...
These concepts are:
a
...

*c
...


quality, process, organisations and management
...

quality, people, organisations and management
...


Correct answer: c
Learning objective 2
...

38
...

b
...

d
...

storing, retrieving, and acquiring inventory items
...

keeping the inventory at a fixed and predetermined level
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


Which one of the following technology is more likely to be used in the billing and
cash receipts process by the seller of goods?
a
...

c
...


RFID
...

Electronic bill payment
...


Correct answer: d
Learning objective 2
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40
...

b
...

d
...

Ethical issues are involved in BPR
...

Employees can be extremely wary when BPR is mentioned
...
8 – critically evaluate BPR techniques
...
11

41
...

b
...

*d
...

Look for ways technology can potentially be applied to create a unique
strategic position for an organisation
...

Look for ways technology can potentially be applied to help organisation
sustain competitive advantage
...
9 – critique the application of information technology (IT) to business
processes by Australian firms
...


Which of the following statements is NOT true regarding Australian businesses?
a
...

*c
...


More than 90% of businesses are using the Internet
...

More than 70% of businesses have incorporated Internet into business
processes
...


Correct answer: c
Learning objective 2
...

43
...

b
...

*d
...

Customer pressure
...

Better socioeconomic environment
...
9 – critique the application of information technology (IT) to business
processes by Australian firms
...
12

Chapter 2: Business processes

44
...
This business is:
a
...

c
...


a compiler
...

a customiser
...


Correct answer: d
Learning objective 2
...

45
...

b
...

*d
...

cannot operate on a manual basis
...

is useful for both everyday consumers and enterprise-level customers
...
9 – critique the application of information technology (IT) to business
processes by Australian firms
...


Which of the following indicates that a company is using the internet effectively for
its business processes?
a
...

c
...


A company has a home page, information only website
...

Customers can contact the company for more information through the website
...


Correct answer: b
Learning objective 2
...

47
...
This phenomenon is referred to as:
a
...

c
...


spill-over effect
...

rent misappropriation
...


Correct answer: b
Learning objective 2
...


2
...


There are four main areas in which an organisation can benefit from the application of
technology to its business processes
...

b
...

*d
...

change-based area
...

marketing-based area
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...


Normally, the first step in a BPR project is to:
a
...

c
...


form a leadership team
...

create and communicate a vision
...


Correct answer: b
Learning objective 2
...


2
...
Michael Porter sees a business as having two options when deciding on a strategy:
(1) cost leadership, or
(2) differentiation
...

Answer:
A cost leadership strategy sees organisations able to carry out their activities cheaper than
their competitors, through economies of scale, technology, low overhead costs or efficient
links with suppliers
...
This higher degree of customer attention and personalisation to meet
customer demands allows the organisation to charge a higher price
...
These two options are
not mutually exclusive; when they are realised successfully, the focal organisation can reap a
profit that is higher than the average
...
1 – identify and interpret the components of organisational strategy and
mission
...
What are the benefits and problems of the functional perspective of the organisation?
Answer:
One strong benefit of the functional perspective is that it provides a great deal of
organisational control
...
This can lead to bureaucracy (a disadvantage)
...
Tasks within the functionally based organisation will be highly defined and
specified
...
The functional structure provides a delineation of tasks across different
departments of the organisation, as well as within departments
...

However, while the functional perspective of the organisation does not reflective of the
reality of today, it creates an overly hierarchical and bureaucratic organisation
...
The hierarchical and bureaucratic nature of the functional organisation
means it can be slow to react to changes in both the internal organisational environment and
the external operating environment
...
Finally, hierarchical and bureaucratic nature of the functional organisation can
lead to an ignorance of customer requirements, so the organisation is focusing on the wrong
things
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
15

3
...

Answer:
A business process was defined as a series of interlocking activities that work together across
the organisation to achieve some predetermined organisational goal that is typically defined
around satisfying customer needs
...
Notice the differences in these definitions
...
Moving from business
function to business process shifts the frame of reference from looking at specific individual
functions to how these functions interact with one another to deliver a good or service to the
customer
...
(c
...
Table 2
...
2 – critique alternative organisational structures, reflecting on their
strengths and weaknesses and the implications for organisational operations
...
3 – identify and describe a business process
...
What are the reasons for adopting a business process perspective within an organisation?
Answer:
The process perspective offers an organisation a more coordinated and integrated approach,
reducing wasted time due to rework, bureaucracy and administration
...
Business processes can eliminate
duplication of data and wastage in storage and can also restructure ineffective
interdepartmental communication networks
...
Furthermore, the business process perspective can yield benefits for an
organisation through improved customer service and customer relations, a value-adding
emphasis and, potentially, a competitive advantage
...
More often than not this will be
based around the customer, whether inside or outside the organisation
...

Business processes can also provide an organisation with a competitive advantage, with
organisations increasingly looking towards the design of their business processes as a means
of distinguishing themselves from the host of competitors they may face in their industry
...

Learning objective 2
...


2
...
The design philosophy of ERP systems is centred on the idea of best practice
...

Answer:
The business processes supported by an ERP system have been designed and programmed
into the system based on what is deemed to be, following research and investigation, the best
way to perform them (i
...
best practice)
...

However, the aim of any organisation is to gain some form of competitive advantage over its
competitors
...
One way for an organisation to do this can be through the
configuration of its business processes
...
The aspect of homogeneity in
ERP packages is that an ERP package’s best practices and processes are available to every
organisation willing to pay for it
...
4 – appraise the benefits of organisations adopting a business process
perspective
...
5 – critically evaluate the role enterprise resource planning (ERP)
systems play in business process design
...
17

6
...

Answer:
The first stage in adopting a business process perspective is that it must be represented in the
design of the organisation
...
As with most things associated with change, support
needs to come from the top down
...
Shifting to a process-based organisation can mean significant
changes in the way people perform their duties
...
This pushes the rights to
decision making further down in the organisation’s hierarchy
...

A shift to a process perspective has the effect of breaking down functional barriers and
divisions that previously existed
...
This can lead to
increased authority for those lower in the organisation, as well as a more stimulating work
environment
...
This can create a degree of resistance among those threatened by the change
for two reasons
...

Second, the manager may face a change in roles and responsibilities and, possibly, the loss of
some authority
...
6 – interpret and communicate issues for organisations changing to a
process-based focus
...
18

Chapter 2: Business processes

7
...
Explain
...

The assumption relating to quality is that the costs of poor quality, as represented through the
costs involved with rework and product returns, are greater than the costs associated with
developing and refining business processes to generate high-quality output
...
People within the organisation need to be encouraged to provide feedback about
the design of a process – particularly at the lower levels of the organisation – since it is often
these people who have the best understanding of how the process really operates, because
they work as a part of it every day
...
It emphasises that the organisation does not
operate as a series of independent departments but that functions interact to provide a good or
deliver a service
...

Finally, TQM asserts that change and improvement can only occur if they have the support
and endorsement of top management
...
So TQM requires
management to focus on processes, rather than individual functions, and provide strong
guidance and support for change efforts
...
7 – summarise and evaluate approaches to changing business
processes, in particular business process re-engineering (BPR)
...
19

8
...
Explain
...
The four key components of this
definition are fundamental, radical, dramatic and process
...
It is aimed at looking at what takes place
in the current system and questioning whether it is really needed
...
Also known as the clean slate
approach, its objective is to encourage thoughts about new ways that a process could be
performed, rather than just tinkering at the edges of existing approaches
...
Therefore, BPR is aimed at
achieving large improvements in the key performance indicators that an organisation uses
...

The thrust is that organisations must forget about functional perspectives, as well as the
associated hierarchies and bureaucracies, and place the emphasis on the processes that are
actually performed
...

Learning objective 2
...

Learning objective 2
...


2
...
Identify and briefly explain the eight steps that should be followed to manage successfully
the transformation of an organisation to a process prospective
...
The first step in a BPR project is to convince others within the
organisation that it is actually required
...

Form a leadership team
...
It is a
time-consuming and challenging process that must involve representatives from across the
organisation
...
This team should be representative of the entire organisation, and not be made up
of representatives from one division within the organisation
...
Those
on the team should also be of authority sufficient that when they say something needs to be
done it will not be questioned or challenged
...
Organisations need a map of where they are heading
...

Empower others to meet the vision
...
Quite often this can involve more than just employee
retraining
...

Plan for and create short-term wins
...
Without it, motivation and drive for the re-engineering effort will wane
and people who originally supported the concept may drop off the idea
...
Even though their attainment does not
represent the completion of the re-engineering effort, it does signal to employees that the
project is progressing
...

Consolidate improvements and encourage further change
...
Re-engineering is not only about changing a
process within an organisation; it can also be about changing the culture and attitude that
pervade that process
...

Institutionalise the new approaches
...
This has a lot to do with the culture of the organisation
...
21

Learning objective 2
...

10
...

Answer:
BPR is not without its critics, who often claim it ignores that organisations primarily consist
of people, who are not something that can be re-engineered, as a machine can
...
The risks involved in the clean slate approach are obviously
great because with the organisation essentially starting from scratch, if the newly designed
and re-engineered process fails, then there may be nothing left to fall back on
...

Learning objective 2
...


2

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