Introduction to Business Processes: Functional Structures and Enterprise Systems, Exams of Advanced Education

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Chapter 1: Introduction to

Business Process

Learning Objectives

After completing this chapter you will be able to:

1. Define the functional organizational structure, and explain why this structure creates problems for modern businesses
2. Describe key business processes in an organization
3. Identify the main integration points between and among processes
4. Understand the cross-functional nature of processes and their relationship to organizational areas
5. Adopt and apply an integrated perspective to business processes
6. Describe GBI’s organizational structure
7. Explain how the SAP system promotes an integrated approach to business processes

Chapter Outline and Teaching Suggestions

1. The Functional Organizational Structure a. The Silo Effect b. Enterprise Systems

Discuss how companies are organized, and explain that the

functional structure is the most common organizational structure.

You can use a university or company or a business school

department that you are familiar with as an example. Point out that

processes are cross- functional. Ask the question: Why is the

functional structure so common? Figure 1-1 will assist you in

explaining the cross-functional nature of business processes.

Explain the silo effect and its negative implications for modern

business organizations. You can give an example such as creating a

sales order in sales and marketing with no integration or

communication with inventory management or production.

Point out that the nature of the functional organizational structure

and the cross-functional nature of processes directly conflict with

each other.

Explain the benefits of an enterprise system (ES) (i.e., supports end-

to-end processes, productivity, competitive edge, monitoring and

changing of business processes, etc.).

2. Business Processes

Explain the four key sections in most of the process chapters.

Provide a brief background on the origins of SAP and the problems

it initially solved.

Explain that most SAP consultants are not programmers and have

mastered the material presented in this book.

Explain the three levels of SAP Certification and the value added of

becoming a SAP-certified consultant.

Point out that the importance of the WileyPLUS online supplements

and the value added to passing the SAP Certification exam.

Reinforce the point that using this textbook and the ancillary

materials can substitute for taking a formal TERP 10 course.

Review questions

1. Question: Describe the functional organizational structure. Why do you think this structure is so common? . Answer: The functional organization structure is divided into functions, or departments, each of which is responsible for a set of closely related activities. This type of organizational structure is widely used because it spreads the responsibility across an organization instead of locating it in one particular person or group. In addition, it enables people to specialize in terms of skills and knowledge. 2. Question: What is the silo effect? Why does it exist? How can an organization reduce or eliminate the silo effect? . Answer: The silo effect refers to an organizational structure in which workers complete their tasks in their functional “silos” without regard to the consequences for the other functions in the process. This situation exists because each department within a functional organization works independently and focuses on its objectives. This tendency can be reduced by thinking sideways or viewing the business across functional boundaries and focusing on the end-to-end nature of the process and its intended outcomes. 3. Question: What is a business processes? Why is a process view of organizations essential to becoming a successful manager? . Answer: A business process is a set of tasks or activities that produce desired outcomes. Every process is triggered by some event, such as receiving a customer order or recognizing the need to purchase something. A process view can liberate managers from the silo effect. Managers must

have a solid understanding of the processes that their company uses so that they can meet their company's and customer's satisfaction.

4. Question: Briefly describe the key business processes included in this chapter in terms of their key steps. . Answer: The key business processes discussed in this chapter are the procurement process (buy), the production process (make), and the fulfillment process (sell). The procurement process refers to all of the activities involved in buying or acquiring the materials used by the organization, such as the raw materials needed to make products. The production process involves the actual creation of the products within the organization. The fulfillment process consists of all the steps involved in selling and delivering the products to the organization’s customers. 5. Question: Explain the interrelationships among the key processes discussed in this chapter. Why are these interrelationships important? . Answer: This chapter discusses many interrelationships among the various processes found within an organization. These various processes must be coordinated in order to be performed successfully. For example, the asset management and customer service processes are closely integrated with production and sales processes. This interrelationship is important to producing quality products, maintenance of production equipment, repairs of products sold to customers, and providing customer satisfaction.

Exercises

Exercises for this chapter are available on the Wiley student companion website at http://www.wiley.com/college/magal/.

Test Questions

Three types of test questions are provided – True/False, Multiple-choice (one right answer), and multiple answer (at least two right answers). These are provided in MS word format as well as in a format that can be imported as a test in blackboard. The files are: Chapter01 Test Questions True False.docx Chapter01 Test Questions Multiple-choice.docx Chapter01 Test Questions Multiple-answer.docx

Chapter 1 Introduction to Business Processes

Multiple Answer Questions

1. Within the financial structure, typical functions or departments found in a modern organization include which of the following? a. purchasing b. operations c. internships d. finance e. marketing Answer : a, b, d, e Difficulty : Medium Page Reference: 1 Section: The Functional Organizational Structure Practice: Yes
2. Which of the following are steps within a generic business process of an organization? a. Payment b. Trigger c. Shipment d. Outcome e. Confirmation Answer : b, d Difficulty : Difficult Page Reference: 4 Section: Business Processes Practice:
3. Which processes have an impact on an organization’s finances? a. Financial accounting processes b. Project management processes c. Management accounting or controlling processes d. Material planning process e. Procurement process Answer : a, c Difficulty : Medium Page Reference: 6 Section: Business Processes Practice: Yes

4. Which processes focus primarily on people and projects? a. Financial accounting processes b. Procurement process c. Production process d. Human capital management processes e. Project management processes Answer : d, e Difficulty : Medium Page Reference: 6 Section: Business Processes Practice:
5. Which of the following are components of the procurement process? a. Warehouse b. Purchasing c. Sales d. Operations e. Accounting Answer : a, b, e Difficulty : Medium Page Reference : 7 Section: Business Processes: Production-Make Practice: Yes
6. Which of the following are components of the production (make) process? a. Sales b. Operations c. Warehouse d. Accounting e. Production Answer : c, e Difficulty : Medium Page Reference : 7 Section: Business Processes: Production-Make Practice:
7. Which of the following are components of the fulfillment (sell) process? a. Sales b. Operations c. Warehouse d. Accounting e. Production Answer : a, c, d Difficulty : Medium Page Reference : 8 Section: Business Processes: Fulfillment-Sell Practice:

12. Which of the following are components of the lifecycle data management process? a. Engineering b. Marketing c. Accounting d. Production e. Sales Answer : a, b, d Difficulty : Medium Page Reference : 10 Section: Business Processes: Lifecycle Data Management-Design Practice:
13. Which departments take part in the conception of an idea? a. Accounting b. Production c. Engineering d. Sales e. Marketing Answer : c, e Difficulty : Medium Page Reference : 10 Section: Business Processes: Lifecycle Data Management-Design Practice:
14. In which elements of the lifecycle data management process does marketing play a role? a. Design b. Conceive product ideas c. Make d. Marketing & service e. Discontinue product Answer : c, d, e Difficulty : Easy Page Reference : 10 Section: Business Processes: Lifecycle Data Management-Design Practice:
15. In which components of the asset management process is production involved? a. Settlement b. Perform maintenance c. Authorize maintenance d. Request maintenance e. Perform service Answer : b, c, d Difficulty : Medium Page Reference : 11 Section: Business Processes: Asset Management and Customer Service-Service Practice:

16. Sales is involved in which steps in the customer service process? a. Perform service b. Create service request c. Settlement d. Authorize service e. Request maintenance Answer : b, d Difficulty : Medium Page Reference: 11 Section: Business Processes: Human Capital Management-People Practice:
17. What part of the project management process is within the various functional areas? a. Budgeting b. Execution c. Settlement d. Planning Answer : a, b, c, d Difficulty : Medium Page Reference : 12 Section: Business Processes: Project Management-Projects Practice: Yes
18. Which of the following products fall(s) within GBI’s line of business? a. Deluxe and professional touring bikes b. Men and women’s off-road bikes c. Motor bikes d. Bike accessories Answer: a, b, d Difficulty: Medium Page Reference: 14 Section: Global Bicycle Incorporated (GBI) Practice: Yes
19. What is true about SAP R/3? a. Supports a single function or department b. Executes every process from start to finish c. Consolidates process data in a single database d. Enables users to view the status of a process in real time Answer: b, c, d Difficulty: Medium Page Reference: 15 Section: How to use this book: SAP Software and Certification Practice: Yes

4. Which of the following statements about business processes is true? a. They are executed across multiple functions. b. They are initiated by some type of trigger. c. They involve multiple steps. d. All of the above e. None of the above Answer: d Difficulty: Medium Page Reference: 4 Section: Business Processes
5. Which term represents a set of tasks or activities that produce desired outcomes? a. Business Process b. Trigger c. Outcome d. Enterprise Resource Planning e. None of the above Answer : a Difficulty : Easy Page Reference: 4 Section: Business Processes Practice:
6. Which term refers to all of the activities involved in buying or acquiring the materials used by the organization, such as raw materials needed to make products? a. Material Planning b. Procurement Process c. Production Process d. Fulfillment Process e. Lifecycle Data Management Answer : b Difficulty : Medium Page Reference: 5 Section: Business Processes Practice: Yes
7. Which process involves the actual creation of the products? a. Material Planning b. Procurement Process c. Production Process d. Fulfillment Process e. Lifecycle Data Management Answer : c Difficulty : Medium Page Reference: 5 Section: Business Processes Practice:

8. Which process uses historical data and sales forecasts to plan which materials will be procured and produced? a. Material Planning b. Procurement Process c. Production Process d. Fulfillment Process e. Lifecycle Data Management Answer : a Difficulty : Medium Page Reference : 5 Section: Business Processes Practice: Yes
9. Which process supports the design and development of products from the initial product idea stage through the discontinuation of the product? a. Material Planning b. Procurement Process c. Production Process d. Fulfillment Process e. Lifecycle Data Management Answer : e Difficulty : Medium Page Reference : 5 Section: Business Processes Practice:
10. Which process tracks the financial impact of process steps with the goal of meeting legal reporting requirements? a. Human Capital Management (HCM) b. Project Management c. Financial Accounting d. Management Accounting or Controlling (CO) e. None of the above Answer : c Difficulty : Medium Page Reference : 6 Section: Business Processes Practice:
11. Which process is used to plan and execute large projects such as the construction of a new factory or the production of complex products such as airplanes? a. Human Capital Management (HCM) b. Project Management c. Financial Accounting d. Management Accounting or Controlling (CO) e. None of the above Answer : b Difficulty : Medium Page Reference : 6 Section: Business Processes Practice:

16. What function does the warehouse perform in the fulfillment process? a. Prepares and sends the shipment to the customer b. Communicates data related to the order to other parts of the organization c. Tracks the order d. Notifies the customer e. None of the above Answer : a Difficulty : Easy Page Reference : 8 Section: Business Processes: Procurement-Make Practice: Yes
17. is concerned with matching the demand for materials in the organization with the supply. a. Business Planning b. The Silo Effect c. Project Management d. Material Planning e. None of the above Answer : d Difficulty : Medium Page Reference : 8 Section: Business Processes: Material Planning-Plan Practice:
18. Which of the following is concerned with the storage and movement of materials? a. Business Planning b. Silo Effect c. Project Management d. Material Planning e. Inventory and warehouse management (IWM) Answer: e Difficulty: Medium Page Reference: 9 Section: Business Processes: Inventory and Warehouse Management-Store Practice:
19. enables an organization to optimize its product development process, from design to market, while ensuring that it complies with industry, quality, and regulatory standards? a. Business Planning b. Lifecycle Data Management c. Project Management d. Material Planning e. None of the above Answer: b Difficulty: Medium Page Reference: 10 Section: Business Processes: Lifecycle Data Management-Design Practice:

20. provides tools to manage and store documents securely and to keep track of the multiple versions of these documents? a. Document Management b. Enterprise Management c. Project Management d. Material Planning e. None of the above Answer: a Difficulty: Medium Page Reference: 10 Section: Business Processes: Lifecycle Data Management-Design Practice:
21. How does GBI Global sell its merchandise? a. Directly to customers b. Via a network of specialized dealers c. Via the Internet d. All of the above e. None of the above Answer: b Difficulty: Medium Page Reference: 13 Section: Global Bicycle Incorporated (GBI) Practice: Yes
22. Which of the following statements about SAP R/3 is true? a. It supports a single function or department b. It is an end-to-end enterprise system c. Sharing data between departments is problematic d. None of the above Answer: b Difficulty: Medium Page Reference: 15 Section: How to use this book: SAP Software and Certification Practice: Yes

5. Which of the following statements regarding organizational data are true? a. Organizational data represent entities such as customers and vendors. b. Organizational data define the structure of an enterprise. c. Organizational data are a consequence of the execution of process steps. d. Organizational data are constantly changing. e. Organizational data change infrequently. Answer : a, b Difficulty : Medium Page Reference : 6 Section: Data in an Enterprise System – Organizational Data Practice:
6. Which of the following statements regarding master data are true? a. Master data represent entities such as customers and vendors. b. Master data define the structure of an enterprise. c. Master data are a consequence of the execution of process steps. d. Master data are constantly changing. e. Master data change infrequently. Answer : a, c Difficulty : Medium Page Reference : 8 Section: Data in an Enterprise Systems – Master Data Practice:
7. Which of the following statements concerning transaction data are true? a. Transaction data represent entities such as customers and vendors. b. Transaction data define the structure of an enterprise. c. Transaction data are a consequence of the execution of process steps. d. Transaction data are constantly changing. e. Transaction data change infrequently. Answer : c, d Difficulty : Medium Page Reference : 12 Section: Enterprise Systems – Transaction Data Practice: Yes
8. Which of the following are examples of organizational data in SAP? a. Client b. Customer c. Purchasing Organization d. Vendor e. Plant Answer : a, b, d Difficulty : Medium Page Reference : 6 Section: Data in an Enterprise System – Organizational Data Practice:

9. Which of the following are examples of master data in SAP? a. Client b. Customer c. Purchasing Organization d. Vendor e. Plant Answer : b, d Difficulty : Medium Page Reference : 8 Section: Data in an Enterprise System – Master Data Practice:
10. A plant can be used to represent which of the following? a. A factory b. A storage facility (warehouse, DC) c. An office d. A legal entity e. A company vehicle Answer : a, b, c Difficulty : Easy Page Reference : 8 Section: Data in an Enterprise System – Organizational Data Practice:
11. Material master data are grouped based on: a. Process b. Material type c. Company Code d. Organizational Element e. Key segments Answer : b, c, d Difficulty : Medium Page Reference : 9 Section: Data in an Enterprise System – Master Data Practice:
12. Which of the following statements regarding instance level reporting are true? a. It provides the status of one occurrence of a process (e.g., one customer order). b. It provides information on the performance of a process across many occurrences (e.g., customer orders over time). c. It is based on data in the transactional system. d. It is based on data in the informational system. e. It uses aggregated data. Answer : a, c Difficulty : Medium Page Reference : 15 Section : Reporting Practice: