Business Development: Q&A on Organizational Structures and Systems

This assignment provides answers to a series of questions related to business development. It begins by discussing the functional organizational structure, its benefits, and drawbacks, and then delves into functional information systems and Enterprise Resource Planning (ERP) systems, highlighting their value, benefits, and pitfalls. The assignment then differentiates between business processes and functions, emphasizing the importance of a process view. It also explains the silo effect and how ERP systems can eliminate it. Further, the assignment explains SAP's invoice verification process, the difference between a bill of materials and product routing, and the conversion of planned orders into production orders. It also explains made-to-order versus made-to-stock strategies and concludes with a case study of IKEA's globalization strategy and how SAP verifies product details.

Running head: QUESTION AND ANSWER
Question And Answer
Name of the Student
Name of the university
Author’s Note

1QUESTION AND ANSWER
Q: 1
The most common organisational structure widely used by the companies over industries
is the functional structure, which divides the organisation according to the role of the employees
within. The departments are divided according to the specialised functions they are assigned
with. Organisations following the functional structure are divided into departments like
marketing, accounting, customer service, manufacturing etc. (Cosh, Fu and Hughes 2012)
Functional organisational structure has evolved due to the increased need of high
specialisation, high control framework of manufacturing within the organisations. Increased
growth of the organisation facilitated the need of the specialisation for increasing the
performance.
Benefits
 Helps to formulate a specialised workforce in particular departments, in turn increasing
the efficiency.
 Increased specialisation leads to increased efficiency and productivity of the company
due to the specialised expertise
 Creates opportunity for appropriate training to inspectors and supervisors that ultimately
brings high level of flexibility within the organisation (Becker, Kugeler and Rosemann
2013).
Disadvantages

2QUESTION AND ANSWER
 Increased specialisation leads to lack of cooperation with the other units of hte
organisation. Hence, this reduces cooperation over the departments within the
organisation.
 Decentralisation of the decision-making is another issue that is present in this type of
structure. The expansion of the organisation leads to lesser control of the top management
of the companies over the departments.
 Increases the clerical cost due to the increased overhead expenses. This structure is
considered uneconomical (Becker, Kugeler and Rosemann 2013).
Q: 2
Functional Information System – This is a system that provides information related to specific
activity in the organisation. It also offers summary of the information for the management
control of such activities (Kuperman, Gardner and Pryor 2013).
Value
This particular system proposes value to the organisation by enabling it to easily store
and acquire the data on need (Rainer et al 2013). This also adds value by assisting the
management to formulate strategic plans and taking decision for the company’s longevity and
prosperity.
Benefits
 Provides accessibility and in-depth knowledge to the data that increases the efficiency
 Provides accurate and up-to-date data to the users
Pitfalls

3QUESTION AND ANSWER
 Vulnerability of the data related to security is increased in this system
 Rate of system breakdown of functional information system is high
Enterprise Resource Planning – This system, better known as EPR is the process that helps the
organisation in integrating and managing different parts within organisation. This incorporate
various departments like sales, marketing, planning, finance, HR and inventory without
disrupting its autonomous operations (Rainer et al 2013).
Value
Value of ERP is in providing functionality to the organisation. It helps in coordinating
resources, information and activities, as well as reduces the costs by improving business process
and healthier risk management (Rainer et al 2013).
Benefits
 Integration of information under single database enabling the company with easier access
to the required data.
 Helps increasing the accuracy, consistency and security of the stored data through the use
of built-in resources and firewalls.
Pitfalls
 Cost of implementing ERP system in the organisation is considerably high
 ERP systems are hard to use in case of data migration due to the complexity.
Q: 3
Difference between Business process and function

4QUESTION AND ANSWER
Business process as defined by Van Der Aalst (2013) focuses on the objective and directs
the activities towards the attainment of the same. Business function on the other hand focuses on
the end-result, where the function remains constant with the ever-changing purpose (Kemp and
Owen 2013).
Business process dictates the flow of interrelated activities, which work together for the
achievement of one single objective. Business function on the other hand implies discrete action,
which produces results.
Organisations incorporating business process integrates various functions. Units of the
functionally oriented organisations on the other hand focus on the particular function.
Coordination in functionally oriented organisation is significantly low compared to
process oriented business.
Importance of Process View
Organisations can explore a number of benefits orienting their business form the process
view. The primary benefit of it is the objective oriented viewpoint of this particular type as it
identifies the attainment of objective as of primary importance (Van Der Aalst 2013). It further
helps in increasing the business agility, revenue efficiency and safety of the business.
Q: 4
Silo Effect – The term is used for addressing the issue of lack in communication within a
business organisation and the cross-departmental support. The large companies using functional
division structure often face this issue in their operation due to the lack of communication and
information sharing. The departments involved often focus on the specific tasks they are

5QUESTION AND ANSWER
assigned with minimising their cooperation wit the other departments related (Tett 2015).
Example USB in their policymaking is on e of the best examples of the silo effect in an
organisation where the inadequate policy due to the lack of information lead the company to
receive a shock of $30bn on mortgage-backed securities between 2007-09.
Elimination of Silo using ERP
The cross-functional association is the only possible way of eliminating the silo effect in
the organisation that requires technological integration for linking the departments within the
organisation. The ERP system helps the managers integrating the departments, process and data
throughout the organisation. This requires updating the data into the ERP system through which
it is communicated throughout the organisation and every single employee in the organisation
has the access to explore the data uploaded in the ERP system (Shaul and Tauber 2013). For
example, the marketing department of an organisation can gain access to the sales an operational
data to analyse and modify the existing strategies in customer satisfaction.
Q: 5
Organisations prefer to use SAP for verifying the invoice they receive for payment. The
SAP confirms the accuracy of the invoice sent by the vendor. However, SAP requires prior
update on the purchase made by the company against the invoice (Štolfa et al 2014).
The invoice verification process involves the following steps:
 Enter Invoice Data – This process involves multiple steps
Enter invoice Date
Verification of the date displayed

6QUESTION AND ANSWER
Enter invoice number
Enter amount from the invoice
Enter VAT amount from the invoice
Tax calculation
PO Number
 Checking vendor payee information – input of the above data reflects the vendor
details against the invoice.
 Verification of the Invoice – The software provides the actual amount of the invoice
against the purchase. Dissimilarity in any case identifies the invoice as faulty than needs
to be revised.
 Stimulation of the invoice – This final verification identifies the alignment of the
product price and tax collected against the products.
 Post invoice for Payment – Completion of the above steps allows the accountant for
proceeding for payment with the invoice (Štolfa et al 2014).
Q: 6
Bill of Materials – Bill of materials is the list of materials or parts that are required to build
particular product. This bill only communicates the products that will be used in building or
assembling a product. Complex form of bill of material can hold information of the products that
needs to be assembled before attaining its utility in the final product. These materials have their
own bill of material (Kiepert 2013). For example, a bill of material can take form of a
spreadsheet that holds the necessary information. However, the security level provided by
spreadsheet is minimum.

7QUESTION AND ANSWER
Product Routing – Product routing on the other hand holds the information about the steps
involved in the process of manufacturing a particular product. Both Bill of material and product
routing hold the information on manufacturing products (Mjirda et al 2013). The main difference
lies within these two is that the one holds the information about the product, whereas, the other
holds the information about the steps incorporated.
Q: 7
Conversion of planned order into production order refers to the process of sending the
raw materials for manufacturing the desired products. The manufacturer can take a number of
process for converting planned order into production order. However, some consideration needs
to be made before initiating the conversion. The master data accuracy needs to be verified along
with the maintenance of needed status of the production order (Help.sap.com. 2018).
Furthermore, it needs to be verified that the material requirements planning, routing and bills of
material components have been implemented in the creation of planned order.
Q: 8
Made to Order
Products that are specifically made on the request of the customers are referred as “made
to order”. This strategy involves the manufacturing of the products to a certain stage of
development. The rest of the stages are remained untapped to keep the opportunity alive for
customisation according to the customers’ desire (Tseng and Hu 2014). This strategy is
extensively implemented in fast-food industry and to some extent in the garments industry.
Benefits

8QUESTION AND ANSWER
 Provides opportunity to the customers to customise the products according ot their
personal taste.
Disadvantages
 The process is both expensive and time consuming, which in turn reduce the sale limiting
it to a certain number.
Made to Stock
This strategy involves the manufacturing of the products based on the prior investigation
of the customers’ Need. The product manufacturing organisation following this traditional
strategy completely manufacture the products according to need of the target population leaving
no scope of customisation or modification (Tseng and Hu 2014). The products are then stored in
the inventory according to the consumer demand forecast.
Benefits
 Provides fast service to the customers as it provides ready to use products to the
customers.
 Products manufactured using this strategy are cost effective
Disadvantages
 Leaves no opportunity of modification
 Accurate forecast of the customers demand is necessary for avoiding wastage.
Q: 9

9QUESTION AND ANSWER
IKEA is a furniture manufacturing company established in 1943 in Sweden.
Globalisation brought positive benefits on the company as it provided opportunity to grow in the
international market. Currently, the company has around 313 stores in over 38 countries around
the world. IKEA is now known as world’s leading furniture manufacturing company in the
international market (Sjögren 2015). The company had a positive respond towards globalisation.
The notable changes in the organisation are the expansion of the company into the Chinese,
Japanese and Australian market that provided great deal of support in the business growth.
The One can assume that perceived strategy accompanied IKEA in its globalisation
venture is that one design suits all. The company is currently selling over 1200 types of products
to its customers around the world (Sjögren 2015). Instead of focusing on the specialised market,
the company held its originality in every market. Henceforth, they refused to adopt the specific
cultural aspects of the international market and promoted Swedish culture in their international
market. Moreover, they focused on environmental friendly cost effective products that can be
both manufactured and sold in the market itself, which in turn contributing into reducing the
distribution cost. The increased globalisation led the company to shift from centralised control to
a more decentralised one that helped them in making quick decision depending on the changing
environment (Sjögren 2015). Moreover, their IT support helped them in maintaining information
flow within the organisation that resulted into the fast growth in the international market.
Q: 10
Several views of a product is SAP refers to the verification process of the details of the
product from the single source of information that is stored in the master data. The placement of
a product initiates the verification process on the availability of the product from different

10QUESTION AND ANSWER
dimensions. The availability is first verified by the procurement process, which verifies the
availability in the master data. Secondly, the data is verified by the production process from the
same source to check with the vendor, which is lastly verified at the fulfilment process to make
sure about the product history. This process views the product history several times before
confirming the information.
The view mentioned here refers to the process or action of verification in the business
operation. Information related to various operation is stored under the master data, which is later
used for verification. For example, the procurement process is considered as view. Procurement
process is the incorporates the purchasing of different materials and obtaining services from
different vendors. The information related to this process is stored under master data. The view
here is the verification of this data depending on the need. These views can be used on various
purposes. Some of them are:
 This is used for resurrecting the missing fact without disturbing other quarries
 For avoiding repetition of the orders.
Q: 11
Organisational data under SAP environment are those that holds specific information of
the organisation depending on the type of the organisation. It is important to customise the SAP
software accordingly for serving the particular needs of the specific organisation. The data stored
in the process are referred as organisational data in the SAP environmental term. Example of this
kind of data can be the organisation specific information that varies over different types of
organisation such as manufacturing organisation or dealership organisation or a combination of
both.

11QUESTION AND ANSWER
Master data on the other hand are comparatively static data that remains constant over
long period and considered as highly classified. Example of this data are customer, supplier,
department, employee or accounts masters (Weissenberger et al 2013). Details stored under this
data can be customer information, employee salary information and other classified information.
Transactional data on the other hand is considered as the hyper active data as the activity
under this is relatively high when compared to the other types of data. Unlike the other data in
SAP environment, this is used on the daily basis for operations like addition, modification or
deletion act, which makes it dynamic, compared to the other types (Weissenberger et al 2013).
Example of this data can be consumer order, stock, purchase order, invoice, payables etc.
Q: 12
The four most common types of material in an ERP system are raw material, semi-
finished material, finished goods and trading goods (Shaul and Tauber 2013). The materials
purchased from the external sources are referred as the raw materials. For example, raw materials
in a car manufacturing company will be the frames, wheels, tires and tubes. The semi-finished
materials on the other hand are the primary products made out of the raw materials. Wheels
manufactured using the tires and tubes are considered as semi-finished materials. The final
products manufactured using the raw materials and semi-finished materials are termed as
finished materials. The sellable car can be considered as the finished materials. Lastly, the
trading materials are considered as the products that are purchased and sold to the customers
without any modification made on the materials.