Business Strategy & Value Chain Analysis - Essay Example

?Business Process Management Reflective Analysis Table of Contents Business Strategy & Value Chain Analysis 3 Enterprise Architecture and Business Strategy 4 Process Modelling – Introduction to BPMN 7 References 9 Business Strategy & Value Chain Analysis The word ‘strategy’ has been one of the most significant words in the world of business over the past century. The term is originated from the word ‘Strategos’ which is a Greek word (Strecker, 2009). Effective strategies are the key to success for any organization in the present competitive business scenario. Several definitions of ‘strategy’ are available in both academic as well as business arena. According to Chandler’s opinion, strategy refers to “the determination of the basic, long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for those goals” (Mazzucato, 2002). Michael Porter, on the other hand has defined strategy as the “broad formula for how a business is going to compete, what its goals should be and what policies will be needed to carry out these goals” (Harmon, 2007). It is quite clear that there are three different phases that form the strategy. In the first phase management identifies what the company is doing now. In other words, they identify the existing strategies of the company. In the next phase it is important to understand about the environment in which the company operates in and in the final phase management has to decide about the next actions that are required to be taken. These decisions are taken by comparing the environmental situation with the company’s existing strategies (Harmon, 2007). The concept regarding value chain is made popular by the famous management expert Michael Porter. Now it is considered as one of the most crucial sources of sustainable competitive advantage for the business organizations. The basic idea of value chain is referred to the processes that convert the raw materials into the finished products that are saleable as well as consumable. It engages the main activities of a company and these activities are organized in such a way that each of them adds ‘value’ to the entire business operation. In simple words value chain is the combination of the supply chain and distribution chain (Orcullo, 2007). Michael Porter has developed a specific model on value chain. In this model there are five primary activities that are directly responsible for value creation. In order to support these five activities, there are four secondary activities that indirectly create values. Primary activities are ‘inbound logistics’ that involve activities regarding receiving and storing of raw materials, ‘operations’ that involve activities related to processing of raw materials, ‘outbound logistics’ which involve collection and distribution of final products, ‘marketing and sales’ that are nothing but the activities associated with promotion, advertising, sales, channel selection etc. and finally ‘services’ that involve actions regarding the ‘after sales services’ that are given to satisfy the consumers (Van Weele, 2009). While researching, I have discovered the importance of value chain in the modern management. I have found that the concept is applicable in all types of organizations, be it a service provider or be it a product manufacturer. I have found several books and online articles that describe the basic idea of ‘value chain’. I have also found that Michael Porter has developed a very useful model that describes the usual value chain of an organization irrespective of the nature of business that it does. Enterprise Architecture and Business Strategy In the present competitive business scenario an integrated approach to both IT and business is indispensible for achieving desired level of success. With the expansion of business operations, today’s organizations are getting more and more complex. In order to manage extreme complexity inside of an organization one need ‘architecture’. Gone are those days when architecture was only associated with the IT and technical domains. In modern business world an enterprise is seen as a purposefully developed system that can be redesigned and adapted in a controlled and systematic way. In such a system the idea of ‘architecture’ is very much relevant and important. When the concept regarding ‘architecture’ is used in case of an entire organization it is called ‘enterprise architecture’. According to Marc Lankhorst, enterprise architecture is a combination of logical principles, models and methods that are used in the process of designing an enterprise’s structure, information systems, business processes and infrastructure. As per The Institute for Enterprise Architecture Developments, enterprise architecture is all “about understanding the different elements that go to make up the enterprise and how those elements inter-relate” (Hinssen, 2009). Enterprise architecture includes the essentials of a business, information system and its evolution. Architecture is found to be very helpful in protecting the essentials of a business without disturbing the adaptability and flexibility. Enterprise architecture provides a holistic outlook of an organization and this is most important features of it. The instruments that are required to develop and use enterprise architecture are still at their early days. In order to design and create an integrated viewpoint of an organization, one need techniques to describe architectures in a way that is coherent. Furthermore, the entire process is required to properly communicate to the relevant stakeholders and this is a challenging task as different stakeholders are likely to have different view point regarding the concept (Lankhorst, 2009). There are different drivers for setting up enterprise architecture. These drivers can be classified into two categories – internal drivers and external drivers. Business strategy and IT strategy are the two most crucial internal drivers for enterprise architecture. The proper alignment between business and IT is very important in the process of developing enterprise architecture. Venkatraman and Henderson have developed a model in this regard. The model is named the ‘Strategic Alignment Model’ and it includes four quadrants in which there are four different perspectives – business strategy, organizational infrastructure, IT strategy and IT infrastructure. Enterprise architecture can be seen as a precious help while executing IT or business strategy (Lankhorst, 2009). If the process of managing an enterprise is represented through a pyramid, then ‘enterprise architecture’ is placed in the middle of that pyramid. At the very top of the pyramid there is vision and mission and they are followed by ‘business strategy’ that is adopted to achieve the mission and vision. Enterprise architecture plays crucial role in translating the organizational goals into some solid changes in the everyday operations of the organization. The following picture gives a better idea about the entire scenario. Enterprise Architecture acting as management instrument [Source: Lankhorst, 2009] The external drivers that greatly influence enterprise architecture include regulatory and legal framework, political system and cultural background of the place where the company is operating (Lankhorst, 2009). The concept regarding enterprise architecture is relevant in case of almost all the organizations including the one where I have worked. In my organization also it is a great instrument that can be used for aligning the business and IT related strategy. Process Modelling – Introduction to BPMN Business process modelling is referred to a technique that documents the business processes by representing each and every element through graphical notations. It can be done by using simple pen and paper or it can also be done by using software tools. Each of the business process models should demonstrates the activities that take place in a specified order. The models also include the ‘actors’ who are involved in the activities, inputs and outputs and the criteria to enter and exit the business process. The business process modelling system acts as a tool that helps in analyzing the activities, information flow and documents in global trade procedures. Furthermore, it also helps in identifying and prioritizing the problematic areas. The UML (Unified Modelling Language) provides a series of graphical notations which are used in business process modelling (United Nations, 2009). BPMN is the abbreviation of Business Process Modelling Notation which was developed by Business Process Management Initiative (BPMI) in the year 2004. BPMI is a consortium that includes several software companies. The standard notation of BPMN consolidates the best concepts from other notations like UML activity diagram, ebXML, IDEF, BPSSm ADF etc. The BPMN notation can be understood by almost all the business users starting from the business analysts to the IT developers. Even the individuals who are involved in managing and monitoring the business processes are also able to understand the notation of BPMN. BPMN notation fills the gap that exists between the designs of the Business Process and their implementation. Furthermore, it makes sure that XML languages are represented with a notation that is business oriented. Lastly Business Process Modelling Notation is a widespread notation that provides overall information to all the stakeholders that are involved in the process (Briol, 2008). While researching on the topic I found a book named “BPMN, the Business Process Modelling Notation Pocket Handbook”. It includes all the basic information regarding BPMN. I can relate this information to what were discussed in the seminar regarding the topic. References Briol, P. 2008, BPMN, the Business Process Modelling Notation Pocket Handbook, Lulu.com Harmon, P. 2007, Business process change: a guide for business managers and BPM and six sigma professionals, Morgan Kaufmann Hinssen, P. 2009, Business: How to move beyond Alignment and transform IT in your organization, Across Technology Lankhorst, M. 2009, Enterprise Architecture at Work: Modelling, Communication and Analysis, Springer Mazzucato, M. 2002, Strategy for business: a reader, SAGE United Nations, 2009, Guide to Business Process Analysis to Simplify Trade Procedures, United Nations Publications Orcullo, N, 2007, Fundamentals of Strategic Management' 2007 Ed., Rex Bookstore, Inc. Strecker, N. 2009, Innovation Strategy and Firm Performance: An Empirical Study of Publicly Listed Firms, Gabler Verlag Van Weele, A. 2009, Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice, Cengage Learning EMEA Read More