,Chapter 1: Introduction to Business jh j h jh jh
Process
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Learning Objectives jh
After completing this chapter you will be able to:
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1. Define the functional organizational structure, and explain why this structure creates
jh jh jh jh jh jh jh jh jh jh
problems for modern businesses
jh jh jh jh
2. Describe key business processes in an organization
jh jh jh jh jh jh
3. Identify the main integration points between and among processes
jh jh jh jh jh jh jh jh
4. Understand the cross-functional nature of processes and their relationship to
jh jh jh jh jh jh jh jh jh
organizational areas
jh jh
5. Adopt and apply an integrated perspective to business processes
jh jh jh jh jh jh jh jh
6. Describe GBI’s organizational structure
jh jh jh
7. Explain how the SAP system promotes an integrated approach to business processes
jh jh jh jh jh jh jh jh jh jh jh
Chapter Outline and Teaching Suggestions
jh jh jh jh
1. The Functional Organizational Structure
jh jh jh
a. The Silo Effect jh jh
b. Enterprise Systems jh
Discuss how companies are organized, and explain that the functional structure is the
jh jh jh jh jh jh jh jh jh jh jh jh
most common organizational structure. You can use a university or company or a
jh jh jh jh jh jh jh jh jh jh jh jh jh
business school department that you are familiar with as an example. Point out that
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
processes are cross- functional. Ask the question: Why is the functional structure so
jh jh jh jh jh jh jh jh jh jh jh jh jh
common? Figure 1-1 will assist you in explaining the cross-functional nature of business
jh jh jh jh jh jh jh jh jh jh jh jh jh
processes.
jh
Explain the silo effect and its negative implications for modern business organizations.
jh jh jh jh jh jh jh jh jh jh jh
You can give an example such as creating a sales order in sales and marketing with no
j h jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
integration or communication with inventory management or production.
jh jh jh jh jh jh jh jh
Point out that the nature of the functional organizational structure and the cross-functional
jh jh jh jh jh jh jh jh jh jh jh jh
nature of processes directly conflict with each other.
jh jh jh jh jh jh jh jh
Explain the benefits of an enterprise system (ES) (i.e., supports end-to-end processes,
jh jh jh jh jh jh jh jh jh jh jh
productivity, competitive edge, monitoring and changing of business processes, etc.).
jh jh jh jh jh jh jh jh jh jh
2. Business Processes jh
, a. Procurement - Buy jh jh
b. Production - Make jh jh
c. Fulfillment - Sell jh jh
d. Material Planning - Plan jh jh jh
e. Inventory and Warehouse Management - Store jh jh jh jh jh
f. Lifecycle Data Management - Design jh jh jh jh
g. Asset Management and Customer Service - Service
jh jh jh jh jh jh
h. Human Capital Management - People jh jh jh jh
i. Project Management - Projects jh jh jh
j. Financial Accounting - Track for Track for External Reporting
jh jh jh jh jh jh jh jh
k. Management Accounting - Track for Internal Reporting jh jh jh jh jh jh
Define and explain a business process. Point out that organizations use many processes to
jh jh jh jh jh jh jh jh jh jh jh jh jh
achieve their objectives and they employ specific terms to identify the processes. Processes
jh jh jh jh jh jh jh jh jh jh jh jh jh
can be directly related or closely related to creating and delivering goods and services.
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
Use Figure 1-2 to illustrate a process that is executed in response to a need (trigger). The
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
process is carried out through a sequence of steps and results in an output. You can use
jh jh j h jh jh jh jh jh jh jh jh jh jh jh jh jh jh
an example such as ordering supplies.
jh jh jh jh jh jh
Processes can be supported by other processes and can have numerous sub-processes. Point
jh jh jh jh jh jh jh jh jh jh jh jh
out that communication and coordination of tasks are very important. Figure 1-3 can
jh jh jh jh jh jh jh jh jh jh jh jh jh
assist you in explaining this point. Ask students to indentify some other processes that
jh jh jh jh jh jh j h jh jh jh jh jh jh jh
they are familiar with.
jh jh jh jh
Describe and give examples of the business processes (A - K). Figures 1-4 through 1-10 will
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
assist you.
jh jh
3. Global Bicycle, Incorporated (GBI)
jh jh jh
Explain that Global Bicycle, Incorporated (GBI) is a fictional company that is used to
jh jh jh jh jh jh jh jh jh jh jh jh jh
illustrate the important concepts, processes, and techniques discussed in the textbook.
jh jh jh jh jh jh jh jh jh jh jh
Figure 1-11 will assist you in explaining GBI's organizational structure.
j h jh jh jh jh jh jh jh jh jh
Call up the SAP University Alliance Community (UAC) website http://uac.sap.com, and
jh jh jh jh jh jh jh jh jh jh
demonstrate the functionality and services available for students. Also instruct students
jh jh jh jh jh jh jh jh j h jh jh
to read the GBI Backround Document on the UAC to understand GBI’s history, products
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
and operations.
jh jh
4. How To Use This Book
jh jh jh jh
a. Chapter Structure jh
b. SAP Software and Certification jh jh jh
c. WileyPLUS
, Explain the four key sections in most of the process chapters. Provide a brief background
jh jh jh jh jh jh jh jh jh jh j h jh jh jh
on the origins of SAP and the problems it initially solved.
jh jh jh jh jh jh jh jh jh jh jh
Explain that most SAP consultants are not programmers and have mastered the material
jh jh jh jh jh jh jh jh jh jh jh jh
presented in this book.
jh jh jh jh
Explain the three levels of SAP Certification and the value added of becoming a SAP-
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
certified consultant. jh
Point out that the importance of the WileyPLUS online supplements and the value added to
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
passing the SAP Certification exam. Reinforce the point that using this textbook and the
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
ancillary materials can substitute for taking a formal TERP 10 course.
jh jh jh jh jh jh jh jh jh jh jh
Review questions jh
1. Question:
Describe the functional organizational structure. Why do you think this structure is so common?
jh jh jh jh j h jh jh jh jh jh jh jh jh
.
Answer:
The functional organization structure is divided into functions, or departments, each of which
jh jh jh jh jh jh jh jh jh jh jh jh
is responsible for a set of closely related activities. This type of organizational structure is
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
jhwidely used because it spreads the responsibility across an organization instead of locating
jh jh jh jh jh jh jh jh jh jh jh jh
jhit in one particular person or group. In addition, it enables people to specialize in terms of
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
jhskills and knowledge.jh jh
2. Question:
What is the silo effect? Why does it exist? How can an organization reduce or eliminate
jh jh jh jh j h jh jh jh j h jh jh jh jh jh jh
the silo effect?
jh jh jh
.
Answer:
The silo effect refers to an organizational structure in which workers complete their tasks in
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
their functional “silos” without regard to the consequences for the other functions in the
j h jh jh jh jh jh jh jh jh jh jh jh jh jh
process. This situation exists because each department within a functional organization
jh j h jh jh jh jh jh jh jh jh jh
works independently and focuses on its objectives. This tendency can be reduced by
jh jh jh jh jh jh jh j h jh jh jh jh jh
thinking sideways or viewing the business across functional boundaries and focusing on the
jh jh jh jh jh jh jh jh jh jh jh jh jh
end-to-end nature of the process and its intended outcomes.
jh jh jh jh jh jh jh jh jh
3. Question:
What is a business processes? Why is a process view of organizations essential to becoming
jh jh jh jh j h jh jh jh jh jh jh jh jh jh
a successful manager?
jh jh jh
.
Answer:
A business process is a set of tasks or activities that produce desired outcomes. Every
jh jh jh jh jh jh jh jh jh jh jh jh jh j h
process is triggered by some event, such as receiving a customer order or recognizing the
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
need to purchase something. A process view can liberate managers from the silo effect.
jh jh j h jh j h jh jh jh jh jh jh jh jh jh
Managers must
j h jh
Process
jh
Learning Objectives jh
After completing this chapter you will be able to:
jh jh jh jh jh jh jh jh
1. Define the functional organizational structure, and explain why this structure creates
jh jh jh jh jh jh jh jh jh jh
problems for modern businesses
jh jh jh jh
2. Describe key business processes in an organization
jh jh jh jh jh jh
3. Identify the main integration points between and among processes
jh jh jh jh jh jh jh jh
4. Understand the cross-functional nature of processes and their relationship to
jh jh jh jh jh jh jh jh jh
organizational areas
jh jh
5. Adopt and apply an integrated perspective to business processes
jh jh jh jh jh jh jh jh
6. Describe GBI’s organizational structure
jh jh jh
7. Explain how the SAP system promotes an integrated approach to business processes
jh jh jh jh jh jh jh jh jh jh jh
Chapter Outline and Teaching Suggestions
jh jh jh jh
1. The Functional Organizational Structure
jh jh jh
a. The Silo Effect jh jh
b. Enterprise Systems jh
Discuss how companies are organized, and explain that the functional structure is the
jh jh jh jh jh jh jh jh jh jh jh jh
most common organizational structure. You can use a university or company or a
jh jh jh jh jh jh jh jh jh jh jh jh jh
business school department that you are familiar with as an example. Point out that
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
processes are cross- functional. Ask the question: Why is the functional structure so
jh jh jh jh jh jh jh jh jh jh jh jh jh
common? Figure 1-1 will assist you in explaining the cross-functional nature of business
jh jh jh jh jh jh jh jh jh jh jh jh jh
processes.
jh
Explain the silo effect and its negative implications for modern business organizations.
jh jh jh jh jh jh jh jh jh jh jh
You can give an example such as creating a sales order in sales and marketing with no
j h jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
integration or communication with inventory management or production.
jh jh jh jh jh jh jh jh
Point out that the nature of the functional organizational structure and the cross-functional
jh jh jh jh jh jh jh jh jh jh jh jh
nature of processes directly conflict with each other.
jh jh jh jh jh jh jh jh
Explain the benefits of an enterprise system (ES) (i.e., supports end-to-end processes,
jh jh jh jh jh jh jh jh jh jh jh
productivity, competitive edge, monitoring and changing of business processes, etc.).
jh jh jh jh jh jh jh jh jh jh
2. Business Processes jh
, a. Procurement - Buy jh jh
b. Production - Make jh jh
c. Fulfillment - Sell jh jh
d. Material Planning - Plan jh jh jh
e. Inventory and Warehouse Management - Store jh jh jh jh jh
f. Lifecycle Data Management - Design jh jh jh jh
g. Asset Management and Customer Service - Service
jh jh jh jh jh jh
h. Human Capital Management - People jh jh jh jh
i. Project Management - Projects jh jh jh
j. Financial Accounting - Track for Track for External Reporting
jh jh jh jh jh jh jh jh
k. Management Accounting - Track for Internal Reporting jh jh jh jh jh jh
Define and explain a business process. Point out that organizations use many processes to
jh jh jh jh jh jh jh jh jh jh jh jh jh
achieve their objectives and they employ specific terms to identify the processes. Processes
jh jh jh jh jh jh jh jh jh jh jh jh jh
can be directly related or closely related to creating and delivering goods and services.
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
Use Figure 1-2 to illustrate a process that is executed in response to a need (trigger). The
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
process is carried out through a sequence of steps and results in an output. You can use
jh jh j h jh jh jh jh jh jh jh jh jh jh jh jh jh jh
an example such as ordering supplies.
jh jh jh jh jh jh
Processes can be supported by other processes and can have numerous sub-processes. Point
jh jh jh jh jh jh jh jh jh jh jh jh
out that communication and coordination of tasks are very important. Figure 1-3 can
jh jh jh jh jh jh jh jh jh jh jh jh jh
assist you in explaining this point. Ask students to indentify some other processes that
jh jh jh jh jh jh j h jh jh jh jh jh jh jh
they are familiar with.
jh jh jh jh
Describe and give examples of the business processes (A - K). Figures 1-4 through 1-10 will
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
assist you.
jh jh
3. Global Bicycle, Incorporated (GBI)
jh jh jh
Explain that Global Bicycle, Incorporated (GBI) is a fictional company that is used to
jh jh jh jh jh jh jh jh jh jh jh jh jh
illustrate the important concepts, processes, and techniques discussed in the textbook.
jh jh jh jh jh jh jh jh jh jh jh
Figure 1-11 will assist you in explaining GBI's organizational structure.
j h jh jh jh jh jh jh jh jh jh
Call up the SAP University Alliance Community (UAC) website http://uac.sap.com, and
jh jh jh jh jh jh jh jh jh jh
demonstrate the functionality and services available for students. Also instruct students
jh jh jh jh jh jh jh jh j h jh jh
to read the GBI Backround Document on the UAC to understand GBI’s history, products
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
and operations.
jh jh
4. How To Use This Book
jh jh jh jh
a. Chapter Structure jh
b. SAP Software and Certification jh jh jh
c. WileyPLUS
, Explain the four key sections in most of the process chapters. Provide a brief background
jh jh jh jh jh jh jh jh jh jh j h jh jh jh
on the origins of SAP and the problems it initially solved.
jh jh jh jh jh jh jh jh jh jh jh
Explain that most SAP consultants are not programmers and have mastered the material
jh jh jh jh jh jh jh jh jh jh jh jh
presented in this book.
jh jh jh jh
Explain the three levels of SAP Certification and the value added of becoming a SAP-
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
certified consultant. jh
Point out that the importance of the WileyPLUS online supplements and the value added to
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
passing the SAP Certification exam. Reinforce the point that using this textbook and the
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
ancillary materials can substitute for taking a formal TERP 10 course.
jh jh jh jh jh jh jh jh jh jh jh
Review questions jh
1. Question:
Describe the functional organizational structure. Why do you think this structure is so common?
jh jh jh jh j h jh jh jh jh jh jh jh jh
.
Answer:
The functional organization structure is divided into functions, or departments, each of which
jh jh jh jh jh jh jh jh jh jh jh jh
is responsible for a set of closely related activities. This type of organizational structure is
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
jhwidely used because it spreads the responsibility across an organization instead of locating
jh jh jh jh jh jh jh jh jh jh jh jh
jhit in one particular person or group. In addition, it enables people to specialize in terms of
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
jhskills and knowledge.jh jh
2. Question:
What is the silo effect? Why does it exist? How can an organization reduce or eliminate
jh jh jh jh j h jh jh jh j h jh jh jh jh jh jh
the silo effect?
jh jh jh
.
Answer:
The silo effect refers to an organizational structure in which workers complete their tasks in
jh jh jh jh jh jh jh jh jh jh jh jh jh jh
their functional “silos” without regard to the consequences for the other functions in the
j h jh jh jh jh jh jh jh jh jh jh jh jh jh
process. This situation exists because each department within a functional organization
jh j h jh jh jh jh jh jh jh jh jh
works independently and focuses on its objectives. This tendency can be reduced by
jh jh jh jh jh jh jh j h jh jh jh jh jh
thinking sideways or viewing the business across functional boundaries and focusing on the
jh jh jh jh jh jh jh jh jh jh jh jh jh
end-to-end nature of the process and its intended outcomes.
jh jh jh jh jh jh jh jh jh
3. Question:
What is a business processes? Why is a process view of organizations essential to becoming
jh jh jh jh j h jh jh jh jh jh jh jh jh jh
a successful manager?
jh jh jh
.
Answer:
A business process is a set of tasks or activities that produce desired outcomes. Every
jh jh jh jh jh jh jh jh jh jh jh jh jh j h
process is triggered by some event, such as receiving a customer order or recognizing the
jh jh jh jh jh jh jh jh jh jh jh jh jh jh jh
need to purchase something. A process view can liberate managers from the silo effect.
jh jh j h jh j h jh jh jh jh jh jh jh jh jh
Managers must
j h jh
