BUSINESS PROCESS

W4
IN THIS CHAPTER THE FOLLOWING QUESTIONS AND
THEMES ARE EXPLORED:
1. THE MEANING OF BUSINESS
2. TYPE OF BUSINESSES
3. FUNCTIONAL ORGANIZATION OF A COMPANY
4. FUNCTIONAL AREAS AND THEIR ROLES WITHIN AN ORGANIZATION
5. WHAT IS A BUSINESS FUNCTION
6. UNDERSTANDING A PROCESS-ORIENTED VIEW OF AN ORGANIZATION
7. THE MEANING OF A BUSINESS PROCESS
8. STRUCTURE OF A BUSINESS PROCESS
9. THE ROLE OF A BUSINESS IN THE FUNCTIONING OF AN ORGANIZATION
10. WHAT IS A WORK PROCESS
11. WHAT IS AN ACTIVITY AND A TASK
12. UNDERSTANDING THE FUNCTIONING OF THE COMPANY AS A WHOLE

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 BUSINESS
BURLTON (2001) AS: A BUSINESS IS ANY ORGANIZATION WHOSE AIM IS TO CREATE RESULTS OF VALUE FOR
SOMEONE WHO CARES ABOUT THOSE RESULTS.
LAGUNA AND MARKLUND (2005) DEFINE BUSINESS AS: AN ORGANIZATIONAL ENTITY THAT DEPLOYS
RESOURCES TO PROVIDE CUSTOMERS WITH DESIRED PRODUCTS OR SERVICES. THIS DEFINITION ACTUALLY
COVERS BOTH KINDS OF ORGANIZATIONS; I.E. BOTH COMPANIES THAT TEND TO MAXIMIZE THEIR PROFIT, I.E.
PROFIT-MAXIMIZING TYPE OF COMPANIES, AND NON-PROFIT MAKING CIVIL AND GOVERNMENTAL
ORGANIZATIONS.
THESE TYPES ARE INTRODUCED VERY SHORTLY, AS FOLLOWS:
A SOLE (SINGLE) PROPRIETORSHIP MEANS THAT THE BUSINESS IS OWNED BY ONE PERSON, WHO IS
RESPONSIBLE FOR THE BUSINESS AND ALSO HAS TO CARRY A PERSONAL LIABILITY FOR THE DEBTS WHICH MAY BE
CREATED BY THE BUSINESS;
A PARTNERSHIP MEANS THAT THE BUSINESS IS OWNED BY A GROUP OF PEOPLE WHO CARRY RESPONSIBILITY
FOR THE BUSINESS AND ALSO HAVE PERSONAL LIABILITY FOR ANY DEBTS THAT MAY BE CREATED BY THE
BUSINESS;

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- A CORPORATION MEANS THAT THE BUSINESS IS OWNED BY A NUMBER OF SHAREHOLDERS
AND CONTROLLED BY A BOARD OF DIRECTORS THAT HIRES A STAFF OF MANAGERS TO LEAD THE
CORPORATION; AND
THERE ARE BUSINESSES, WHICH ARE OWNED BY THEIR EMPLOYEES, SUCH AS THE COOPERATIVE
ORGANIZATIONS, OR E.G. IN THE UK, THE JOHN LEWIS PARTNERSHIP.
THESE TYPES INCLUDE MANUFACTURING, INFORMATION, FINANCIAL, REAL ESTATE, RETAIL-
TRADE, SERVICE COMPANIES, AND OTHERS

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 FUNCTIONAL AREAS
A FUNCTIONAL AREA REPRESENTS A CERTAIN ORGANIZATIONAL UNIT OR DEPARTMENT WITHIN THE COMPANY OR ORGANIZATION,
WHERE A SET OF TIGHTLY CONNECTED BUSINESS FUNCTIONS AND ACTIVITIES ARE CARRIED OUT IN ORDER TO ACCOMPLISH A
PARTICULAR KIND OF WORK IN ACCORDANCE WITH THE SPECIALIZATION OF THE FUNCTIONAL AREA.
1. MARKETING AND SALES. THIS FUNCTIONAL AREA IS USUALLY DIVIDED INTO MARKETING AND SALES BRANCHES
THERE ARE MANY BUSINESS FUNCTIONS AND ACTIVITIES,WHICH ARE PERFORMED WITHIN THE FRAMEWORK OF THIS FUNCTIONAL
AREA, SUCH AS:
PERFORMING MARKETING RESEARCH,
CARRYING OUT MARKETING ANALYSIS,
DEVELOPING A MARKETING PLAN,
CALCULATING PRODUCTS PRICES,
DEVELOPING A SALES FORECAST,
PROCESSING SALES ORDERS, AND
CARRYING OUT SALES ANALYSIS. (EXT)

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 2. PRODUCTION AND MATERIAL MANAGEMENT
THERE ARE A NUMBER OF BUSINESS FUNCTIONS AND ACTIVITIES PERFORMED WITHIN THIS
FUNCTIONAL AREA, SUCH AS:
DEVELOPING A PRODUCTION PLAN,
DEVELOPING A PURCHASING PLAN,
DEVELOPING A QUALITY PLAN,
MONITORING THE PRODUCTION PROCESS,
PLANNING AND CONTROLLING THE BUDGET,
CONTROLLING QUALITY,
PURCHASING RAW MATERIALS AND OTHER COMPONENTS, AND
DETERMINING EFFECTIVE SHIPMENT APPROACHES.

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 3. HUMAN RESOURCES
IN THE FRAMEWORK OF THIS FUNCTIONAL AREA A NUMBER OF BUSINESS FUNCTIONS AND
ACTIVITIES ARE PERFORMED, SOME OF WHICH ARE:
TAKING CARE OF RECRUITMENT,
ORGANIZING EMPLOYEE TRAINING,
PROVIDING HEALTH CARE INSURANCE FOR EMPLOYEES,
CARRYING OUT RETENTION, RESIGNATION, RETIREMENT AND DISMISSAL PROCEDURES,
FOLLOWING PROMOTION PROCEDURES.

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 4. FINANCE AND ACCOUNTS
IN THE FRAMEWORK OF THIS FUNCTIONAL AREA, A NUMBER OF BUSINESS FUNCTIONS AND
ACTIVITIES ARE CARRIED OUT, INCLUDING THE FOLLOWING:
REGISTERING ACCOUNTS RECEIVABLE TRANSACTIONS,
REGISTERING ACCOUNTS PAYABLE TRANSACTIONS,
PREPARING SALARIES,
PREPARING FINANCIAL ANALYSES AND REPORTS,
DEVELOPING THE FINANCIAL PLAN OF THE ORGANIZATION, AND
PROVIDING CAPITAL AND RESOURCES.

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 5. CUSTOMER SERVICE
WITHIN CUSTOMER SERVICE MANY ACTIVITIES AND BUSINESS FUNCTIONS ARE EXECUTED,
INCLUDING:
PROVIDING CUSTOMERS WITH INFORMATION,
GIVING ADVICE NEEDED,
CONDUCTING CUSTOMER SUPPORT,
HELPING IN SOLVING CUSTOMER CLAIMS, AND
PROVIDING AFTER-SALES SUPPORT.

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 6. ADMINISTRATION AND IT SUPPORT
THIS FUNCTIONAL AREA COMPRISES DIFFERENT BUSINESS FUNCTIONS AND ACTIVITIES,
INCLUDING THE FOLLOWING:
PREPARING MEETINGS AND REPORTS,
RECEPTION WORK,
ORGANIZING AND RECORDING MAIL,
PROVIDING SOFTWARE AND HARDWARE SUPPORT,
DEVELOPING AND MAINTAINING THE COMPANYS INFORMATION SYSTEM, AND
TAKING CARE OF NETWORK COMMUNICATIONS.

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 BUSINESS PROCESS

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- A PROCESS IS A LOGICAL, RELATED, SEQUENTIAL (CONNECTED) SET OF ACTIVITIES THAT TAKES
AN INPUT FROM A SUPPLIER, ADDS VALUE TO IT, AND PRODUCES AN OUTPUT TO A
CUSTOMER;
A MAJOR PROCESS IS ONE THAT USUALLY INVOLVES MORE THAN ONE FUNCTION WITHIN THE
ORGANIZATIONAL STRUCTURE, AND ITS OPERATION HAS A SIGNIFICANT IMPACT ON THE WAY
THEORGANIZATION FUNCTIONS;
A SUBPROCESS IS A PORTION OF A MAJOR PROCESS THAT ACCOMPLISHES A SPECIFIC
OBJECTIVE IN SUPPORT OF THE MAJOR PROCESS;
ACTIVITIES ARE THINGS THAT GO ON WITHIN A PROCESS OR SUBPROCESS; THEY ARE USUALLY
PERFORMED BY UNITS OF ONE (ONE PERSON OR ONE DEPARTMENT);
TASKS ARE INDIVIDUAL ELEMENTS AND/OR SUBSETS OF AN ACTIVITY; TASKS RELATE TO HOW
AN ITEM PERFORMS A SPECIFIC ASSIGNMENT. THE DEFINITIONS MADE BY HARRINGTON ET

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 A BUSINESS PROCESS HIRARCY

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 VERTICAL OR FUNCTIONAL PROCESSES, WHICH ARE CONTAINED WITHIN A CERTAIN
FUNCTIONAL AREA OR DEPARTMENT,
FOR EXAMPLE: PRODUCTION PLANNING A FUNCTIONAL PROCESS WITHIN THE PRODUCTION
DEPARTMENT; AND
HORIZONTAL OR CROSS-FUNCTIONAL PROCESSES, WHICH CUT ACROSS SEVERAL
FUNCTIONAL AREAS,
FOR EXAMPLE: ORDER FULFILLED A HORIZONTAL PROCESS, WHICH GOES THROUGH THE
DEPARTMENTS SALES, PRODUCTION, AND ACCOUNTS.

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 THE PROCESS IS CHARACTERIZED BY THE FOLLOWING:
INPUTS OF ALL TYPES, SUCH AS RAW MATERIALS, INFORMATION, KNOWLEDGE,
COMMITMENTS, AND STATUS ARE TRANSFORMED INTO OUTPUTS AND RESULTS;
TRANSFORMATION OCCURS ACCORDING TO PROCESS GUIDANCE, SUCH AS POLICIES,
STANDARDS, PROCEDURES, RULES, AND INDIVIDUAL KNOWLEDGE; AND
REUSABLE RESOURCES ARE EMPLOYED TO ENABLE THE CHANGE TO HAPPEN, SUCH AS
FACILITIES, EQUIPMENT, TECHNOLOGIES, AND PEOPLE.

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 A PROCESS STRUCTURE

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 THE STRUCTURE OF THE PROCESS WAS CHARACTERIZED
A) INPUTS AND OUTPUTS
TO UNDERSTAND A PROCESS, IS IMPORTANT TO IDENTIFY ITS BOUNDARIES; THIS IS ITS ENTRY
AND EXIT POINT. IDENTIFYING THE INPUT IS NECESSARY FOR THE PROCESS IN ORDER TO
PRODUCE THE DESIRED OUTPUT. INPUTS AND OUTPUTS CAN BE TANGIBLE (SUCH AS RAW
MATERIALS) OR INTANGIBLE (SUCH AS INFORMATION).
B) FLOW UNITS
A FLOW UNIT CAN BE DEFINED AS A JOB OR AN ENTITY THAT PROCEEDS THROUGH VARIOUS
ACTIVITIES AND FINALLY EXITS THE PROCESS AS A ACCOMPLISHED OUTPUT. THE FLOW UNIT CAN
BE A UNIT OF INPUT (E.G., RAW MATERIAL), A UNIT OF ONE OR SEVERAL INTERMEDIATE

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 STRUCTUR OF A MAJOR BUSINESS PROCESS

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 THE REALITY A MAJOR BUSINESS PROCESS

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