Saturday, March 13, 2010

Week 3: Strategic Decision Making

1. Define TPS & DSS, and explain how an organisation can use these systems to make decisions and gain competitive advantages.

A transaction processing process (TPS) is a system that serves a business on an operational level by recording each and every transaction within a business. There is a trend for TPS to move online.

A decision support system (DSS) is a system that allows managers to make decisions based on data through the creation of models. It supports managers in their decision making. .

These systems allow businesses provide an organisation with the necessary information to make more effective decisions more efficiently, thus allowing it to gain a competitive advantage.

2. Describe the three quantitive models typically used by decision support systems.
  1. Sensitivity analysis: the study of the impact that changes in one or more parts of a model have on other parts of the model. Essentially, it asks what will happen to the overall result if you change one or more parts of your systems.
  2. What-if analysis: checks the impact of a change in an assumption on the proposed solution. It is used to understand the effects of certain situations on a business.
  3. Goal-seeking analysis: finds the inputs necessary to achieve a goal such as a desired level of output. For example, how many units have to be sold to make a certain profit.
3. Describe a business process and their importance to an organisation.

A business process is a standardised set of steps to achieve a certain output or goal, such as processing a customer order. It allows a business to achieve its goals by turning an input into an output. Their importance to a business is it's ability to efficiently and effectively achieve its goals through optimising its business processes.

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

Business process improvement is the examination and mapping out of current business processes with the aim of continual improvement of business processes.

Business re-engineering differs in that it assumes the business needs to be overhauled in order to improve, for example, following a merger.

5. Describe the importance of business process modelling (or mapping) and business process models.

Business process modelling refers to the creation of a detailed flowchart or process map of a work process. Business process models are graphic descriptions of a process, showing the sequence of process tasks, which is developed of a specific purpose and from a selected viewpoint. They are important as they allow an organisation to analyse whether its processes are effective, for the purpose of improving them (and thus becoming more efficient).