Strategic Information System Report: API's Business Analysis

This report provides a comprehensive analysis of American Pharmaceutical Industries (API)'s strategic information system. It begins with a literature review covering API's organizational structure, operational problems, and potential system acquisition methods, including ERP. The report examines a system flowchart for sales procedures and identifies control problems and potential fraud within the system. Part 2 delves into the development and adoption of accounting software packages, the current market size, the market leader (SAP), and its sources of competitive advantage, as well as the challenges faced by customers of accounting software. The report concludes by summarizing the key findings and providing references to support the analysis. The report highlights the importance of ERP in improving efficiency and integrating various departments within API, addressing issues related to its functional organizational structure and market position.

Strategic information system

Table of Contents
LITERATURE REVIEW................................................................................................................1
INTRODUCTION...........................................................................................................................1
PART 1 ..........................................................................................................................................1
1. Organisational structure of API..........................................................................................1
2. Operational problems because of organisational structure ................................................2
3. Likely system acquisition method......................................................................................3
4. System flowchart for sales procedures...............................................................................4
5. Control problem and possible sort of fraud in above mentioned system...........................5
PART 2 .......................................................................................................................................6
1. Developing and adopting accounting software packages...................................................6
2. Current market size.............................................................................................................6
3. Leader of market and source of competitive advantage.....................................................7
4. Challenges to the customer of accounting software...........................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

LITERATURE REVIEW
INTRODUCTION
Modern accounting tools are necessary for success of an organization because they assist
in recording and analysing complex data. Most of the companies want to expand their business in
various part of this world, globalisation helped many enterprises in earning more revenue but at
the same time it bring complexity in structure of a firm as well as in their business operation.
American Pharmaceutical Industries (API) is a leading company of health and beauty care
products. They are considered as the largest wholesale distributor for pharma commodities. This
report will discuss about their organisational structure and operational problems (Csaszar, 2012).
System acquisition method will also become part of this file. Competitive advantage of
accounting software will be explained at the end of this literature review.
PART 1
1. Organisational structure of API
Cited company believe in having strong top level management. They have distributed
their organisation in different parts, like merchandise, marketing, supply chain, pharma business
development, people. In this firm, there are five general manager for various major departments
which are mentioned above. They report to the managing director of enterprise who also hold
position of CEO. Besides these post, chief finance officer and chief information officer also play
crucial role in the process of decision making. API is a public company, they have to follow all
the regulations made by government in order to set good example in-front of other firms
(Tavitiyaman, Qiu Zhang and Qu, 2012). Cited organisation has adopted functional structure
where they have make various divisions on the basis of specialised taskforce. They believe in
decentralisation and all the employees follow scalar chain principles. Managing director play
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crucial role in success of a company and according to Mr Peter Robinson (2017), Group
chairman, Mr Richard Vincent (Present CEO and MD) has necessary experience in
pharmaceutical field and he can work in current organisational structure of the enterprise
(Richard Vincent to replace Stephen Roche as Australian Pharmaceutical Industries CEO. 2017).
2. Operational problems because of organisational structure
Cited firm has specialised department for every task. It is helping employees in
performing their work in an effective manner. But there are some troubles in adopting functional
structure. Various division of this enterprise do not understand the work of other wings which
can be considered as the main reason that sometime they start working against each other. For
example sales department may need more people in their team but finance division can say no
because of lack of funds. In order to fulfil individual target, they forget about goals of the
company. Synchronisation of efforts can result in earning more profit (Fan, Wong and Zhang,
2013). API is largest wholesale distributor in Australia, when a firm operates at such a huge level
then they have to face difficulty in managing various functional areas. Culture and needs of
people are different in every part of the country, at the end, they work as a small enterprise on
their own.
Decentralisation create problems in decision making process as authority is available to
more than one people which sometime generate confusion among employees. It is a costlier
system because it include enhancement in administration cost, cited organisation has to select
people from lower level and than train them in order to make workers senior manager for
upcoming time (Englmaier and Leider, 2012). Decentralisation can be considered as an extra
expenditure for a long period of time.
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3. Likely system acquisition method
Enterprise resources planning will help various department of cited organisation.
Currently this firm is having a functional structure where two department do not have any
knowledge about goals and work of each other. ERP will help API by bringing integration in the
nature of business, this will result in better synchronisation of efforts. Their financial position is
sound so the need of commercial and customer software is not necessary but mistake like
duplication of work, because of functional structure, has to be stopped in short period of time. In
the view of Deborah Hadwen (2017), CEO, TCS – Australia and New Zealand, ERP can save lot
of time and money for cited organisation (TCS Delivers SAP Transformation for Australian
Pharmaceutical Industries. 2017). It can successfully integrate retail and wholesale business of
the company which will assist them in retaining the top spot in pharmaceutical industry.
Optimum utilisation of available resources is essential for attaining long term goals, if API
reduce wastage of funds then they can earn more revenue in short time period and expand their
reach to new emerging markets. ERP will also reduce complexities in various operations. Cited
organisation need transformation in their business, this software will increase their competency
in the market.
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4. System flowchart for sales procedures
Source: Sales process flowchart
Procedure of sales start with purchase order from customers. They provide a receipt to
the sales representative of the company. Agents appointed by cited organisation review the
details of items which buyer is demanding. They check standard terms which are made by
government, a person who wants to buy medicine in bulk must comply with the rules and
regulations regarding pharmaceutical purchase which is present in a territory. If agent do not find
any trouble in complying the terms then they can approve the order for shipping (Process
Flowchart. 2017). But if there is any problem then the whole matter go in-front of attorney, if
he/she find any flaw in following the rules then he/she return the request to agent after marking a
'no'. Sales representative get notified about the whole incidents and reason for disapproving is
also given to them.
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Illustration 1: Flowchart

In case, attorney is OK with the process then he/she mark 'yes'. The normal procedure
starts after this where order is shipped at the destination which is decided by both parties (Iyer
and Veeraraghavan, 2012). This system is followed in the wholesale business which has highest
amount of contribution in cited company's total revenue. Their are various government
regulation relating to sale of pharma products so it is important for cited organisation to check
the background of every buyer who is giving order in bulk.
5. Control problem and possible sort of fraud in above mentioned system
By analysing above procedure, it is easy to find that agents have lot of power and they
work as the intermediator between company and its clients. Cited organisation is present in
different part of Australia and New Zealand, they cannot keep an eye on every worker who is
appointed for the task of taking order. Manager of various regions face problems relating to
monitoring performance of agents, they do not have much control on the work performed by an
agent (Csaszar, 2012). Intermediator understand his/her position, they do not listen to the
instructions given by their seniors because agents bring business to the company and its is hard
to fire them out of the organisation.
Scope of committing any fraud is high in the above mentioned process. The
representatives appointed by API can ask for extra money to the buyers in order to deliver their
goods on priority basis (Magal and Word, 2011). They have lot of experience in this field, they
can communicate to customers about the methods which can help purchaser to get approval for
an order without fulfilling all the formalities which is required under the mentioned terms and
conditions.
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PART 2
1. Developing and adopting accounting software packages
SAP (ERP) is considered as one of the most successful accounting software which is
present in the current business environment. Cited company can make necessary changes in this
software according to their need, this can help them in bringing simplicity in their operations and
they can easily expand their enterprise by targetting more customers. SAP offer various products
like Solution manager, xApps, Industry solution etc. In the words of Stephen Roache (2011),
SAP (ERP) will enhance competitiveness of cited organisation. If is difficult for the enterprise
two focus on their retail and wholesale business in one time. But if they use this accounting
software then they can scale both operations and fulfil demand of their customers without
hampering efficiencies of the enterprise.
Adopting new technology is essential for every organisation, API is making large variety
of products. It is difficult for top level management to bring all the department on the same page,
by using SAP (ERP) they can provide strength to the connection between different divisions like
Logistics, Sales and Customers service etc. (Hufgard and Gerhardt, 2011). SAP can integrate
retail and wholesale business, it will save time as well as money of the API. These two can be
considered as one of the most significant resources for an enterprise.
2. Current market size
The ERP application is a $83 billion approx. market. SAP has almost 6% share of this
sector which is increasing continuously. They have many competitors like FIS Global, Oracle,
Intuit Inc. SAP is leader in this industry because they have highest amount of share i.e. 6%. FIS
Global is on second spot, they have 4% market, they cannot overtake SAP because their growth
rate is low compared to the table leader (Iyer and Veeraraghavan, 2012). Their are other
accounting software like Xero, Netsuite, etc. but they can assist an organisation in particular
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work or department. One of the most important thing that should be noted is that almost 70% of
the market share of ERP application is captured by small firms. They do not have any global
recognition and their area of operation is very limited.
3. Leader of market and source of competitive advantage
SAP is the leader in market of ERP application. They hold highest amount of share (6%)
and they are going with at a rate of 23% approx. in present scenario, this company has complete
sector to exploit because around 70% sector is captured in small firms. They do not have much
resources and their marketing technique is not very aggressive (Hufgard and Gerhardt, 2011).
SAP can hold their position of table leader for a long time as they have necessary funds and
human capital which is essential to become leader in an industry. SAP SE is present has more
than 335,000 customer in around 180 countries. This organisation started their business in 1972
and almost 85,000 employees are working in this company. Head start and quality human
resource give competitive advantage to this enterprise. This firm is always think about heir
employees and give them freedom to work according their nature. This result in better creativity
in the products launched by SAP.
4. Challenges to the customer of accounting software
SAP (ERP) is considered as one of the latest technology that is present in current era. For
most of the organisation, who are adopting this accounting software for the first time, ERP is
difficult to operate. Company can provide training to the employees of company but this
technology cannot be learnt in one time. SAP (ERP) is very expensive, it cannot be installed by
any small firm. When an enterprise invest huge amount in this software but still they face many
problems while using it than they complaint about complexity of the programme (Magal and
Word, 2011). SAP should try to make new software which are easy to operate, they also have to
introduce new changes in their product because business environment, in this era, is changing
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rapidly. In the view of Aleksey Osintsev (2015), they should try to include some legal system
because it will become serious challenge for most of the companies who are using SAP (ERP) in
upcoming time.
CONCLUSION
At the end, it can be concluded that organisational structure play crucial role in success or
failure of an enterprise. An organisation who operates at large level face various problems like
duplication of work which result in waste of time and money. By adopting modern accounting
and data processing software they can synchronise task of all departments. A system flow chart
can assist in finding the different kind of flaws that is present in a procedure. SAP (ERP) is one
of the most popular and successful software, this company get some extra edge over its
competitors because of their quality staff and global reach.
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REFERENCES
Books and Journals
Csaszar, F.A., 2012. Organizational structure as a determinant of performance: Evidence from
mutual funds. Strategic Management Journal. 33(6). pp.611-632.
Englmaier, F. and Leider, S., 2012. Contractual and organizational structure with reciprocal
agents. American Economic Journal: Microeconomics. 4(2), pp.146-183.
Fan, J.P., Wong, T.J. and Zhang, T., 2013. Institutions and organizational structure: The case of
state-owned corporate pyramids. The Journal of Law, Economics, and Organization.
29(6). pp.1217-1252.
Hufgard, A. and Gerhardt, E., 2011. Consolidating business processes as exemplified in SAP
ERP systems. S-BPM ONE-Learning by Doing-Doing by Learning. pp.155-171.
Iyer, D.R. and Veeraraghavan, S., 2012. Effective Pricing with Sap Erp. Galileo Press.
Magal, S.R. and Word, J., 2011. Integrated business processes with ERP systems. Wiley
Publishing.
Tavitiyaman, P., Qiu Zhang, H. and Qu, H., 2012. The effect of competitive strategies and
organizational structure on hotel performance. International Journal of Contemporary
Hospitality Management. 24(1). pp.140-159.
Online
Process Flowchart. 2017. [Online]. Available
through :<http://www.conceptdraw.com/examples/pharmaceutical-industry-all-work-
flow-chart>. [Accessed on 14th September 2017].
Richard Vincent to replace Stephen Roche as Australian Pharmaceutical Industries CEO. 2017.
[Online]. Available
through :<http://www.theaustralian.com.au/business/companies/richard-vincent-to-
replace-stephen-roche-as-australian-pharmaceutical-industries-ceo/news-story/
a716f22aa1cf1e5d3b113d32e44f40b2>. [Accessed on 14th September 2017].
TCS Delivers SAP Transformation for Australian Pharmaceutical Industries. 2017. [Online].
Available through :<https://www.tcs.com/tcs-deliver-sap-transformation-australian-
pharmaceutical-industries>. [Accessed on 14th September 2017].
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