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Introduction: From Business to Business Anthropology (1)

Introduction: From Business to Business Anthropology

 Robert Guang Tian

ABSTRACT

 

Business anthropology is a fast growing branch of applied anthropology that is characterized by a qualitative methodology and cultural sensitivity.  Traditionally, business administrators relied on more hard scientific methods in their business management and operation practice.  In addition, many organizations tended to be ethnocentric and culture bound.  More recently business administrators started to apply more qualitative methods, such as the ethnography and participant observation.  This chapter introduces readers to key and basic information about business and anthropology.  The contributions that anthropologists have made and should make within the business world are also discussed. 

 

LEARNING OBJECTIVES

 

  1. Understand what anthropology can contribute to business perspectives.
  2. Gain the basic knowledge about the business planning process and functional areas.
  3. Recognize basic anthropological concepts, and principles, as well as how they differ in various anthropological sub fields.
  4. Be aware of that business anthropology is a rapidly growing subfield in applied anthropology that has significant contributions to make to the business world.
  5. Understand the significance of studying business anthropology for both anthropologists and business specialists.
  6. Identify roles anthropology has to play in business as well as how anthropologists work within a business context.

 

 

  1. 1.     Introduction

 

One of major functions of business education is to prepare students to use the knowledge they have learned in useful, personally satisfying, and income-producing ways. In the contemporary, highly competitive and globalized business world, both public and private organizations seek employees and researchers who understand the cultural context of business ranging from consumer behavior to human resources management, from marketing to transnational business strategies.[i]  Due to the growing use of qualitative methods, the techniques of anthropology are increasingly in vogue, creating a need to provide training in this area.  Although it is not totally new, the application of anthropological methods in business research and business education has great potential to be explored for informing multi-disciplinary research in management both conceptually and methodologically.[ii]

Anthropology has made significant contributions in the real business world. Consumer behavior is a specific area where qualitative methods, such as those of anthropology, are gaining importance and prestige.[iii]  However, the theories and methods of this qualitative social science have not been as widely phased into business curriculum as they could and should have been.[iv]  To help remedy this situation, the authors of this book would like to explore how anthropology can be more fully and effectively integrated into business practice by systematically combining modern business principles and modern anthropology principles into a newly developed but still growing field that is deemed to have a promising future – the emerging field of business anthropology. [v]

                In this introductory chapter we will first outline the most important principles and issues in the modern business world with an emphasis on the defining elements and functions of business.  Next, we will present the materials to help the readers understand what is anthropology and the updated progress in the field of anthropology.  We will then briefly discuss what is business anthropology and its applications in the real business world. We will also describe some of the contemporary business anthropologists and their works to demonstrate the unique contributions that business anthropologists can make to the business practice. 

We will also review the relationship between businesses, business education, and anthropology; discuss how anthropological practices have been successfully used in business practice; and explore possible applications to business education. The goal is to introduce the concepts of business anthropology in a user-friendly way to provide perspectives that can be employed by business educators, particularly those who have limited exposure to anthropology and qualitative research methods in the classroom.

 

 

  1. A Primer on Modern Business

 

What is Business?

 

There are various definitions of business.  The traditional definition claims that business is an entity that brings together time, effort and capital in order to produce a profit.  According to Wikipedia, the free encyclopedia, the etymology of “business” relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term “business” has at least three usages, depending on the scope. The singular usage above refers to a particular company or corporation, the generalized usage refers to a particular market sector, such as “the music business” and compound forms such as agribusiness, and the broadest meaning includes all activity by the community of suppliers of goods and services.  However, the exact definition of business, like much else in the philosophy of business, is a matter of debate.[vi]

A business, also called a firm or an enterprise, is a legally recognized organization designed to provide goods and/or services to consumers, governments or other businesses. A business needs a market. A consumer is an essential part of a business. Businesses are predominant in capitalist economies, most being privately owned and created to earn a profit to increase the wealth of its owners.  The owners and operators of a business have as one of their main objectives the receipt or the generation of a financial return in exchange for work and acceptance of risk. Notable exceptions include cooperative businesses and state-owned enterprises. Socialistic systems involve government, public, or worker ownership of most sizable businesses.[vii]  In today’s world, we are surrounded by businesses everywhere. These businesses are the units that perform most of the economic activity in our society.  Most businesses exist to generate a profit, although there are some businesses that exist to perform a function other than profit, such as cooperatives and non-profit organizations.

            Business and industry are fundamental ways of organizing economic activity to meet basic human needs in the modern market societies. Business means the buying and selling of goods and services in the marketplace (also known as commerce or trade), while industry refers to the organized production of goods and services on a large scale, [viii] which includes all the individual business firms that produce or marketing the same products or services.  Business studies as an academic subject are taught in many higher education institutions. It includes the study of the management of individuals to maintain collective productivity in order to accomplish particular creative and productive goals, usually to generate profit.[ix]  Businesses can be classified into different types and there are many different ways of classifying businesses.  In this book we group the businesses into eight  basic types (Table 1.1 ).

 

Table 1-1 Summarized Business Types

Type

Content

Examples

Manufacturer

Take raw materials and make finished products for sale.

 

Car Makers, Steel Factories

Service

Do not produce physical products but offer  intangible service to consumers.

 

Hospitals, Hotels, Law offices

Retailers and Distributors

Buy goods from the producers or wholesalers and sell them to customers at a higher price.

 

Wal-mart, Kmart, Dollar Tree

Agriculture and Mining

Extractive industries that take raw materials or harvest product from ground.

 

Forestry, Fishing, Coal Mining

Finance

Offer financial products or services to consumers and other businesses for profits.

 

Banks, Insurance Companies, Investment Funds

Utilities

Provide vital public service to households, businesses, and other social organizations.

 

Water Suppliers, Gas Companies,  Hydro Suppliers

Real Estate

Buy, sell, and develop land and buildings.

 

Century 21 Real Estate, New Town Developers 

Transportation

Move people and goods around the world.

Bus or Taxi Companies, Shipping and Freight Companies, Airlines

Table 1

 

Businesses can be privately owned or publicly owned or owned by the government. Government usually regulates businesses for a variety of reasons. These will include collecting corporate taxes.  Also certain businesses poses a risk to the public and therefore must be regulated. Some businesses, especially extraction and manufacturing, have a significant impact on the environment. If they were left unregulated, they could, while carrying out their functions for profit, do irreparable harm to the environment.  Some other businesses, such as drug companies and pharmaceuticals, must be regulated so that safety and health standards can be maintained.  Drugs must be monitored so any that begin to cause serious side effects are quickly taken off the market. [x]

Business can be beneficial to society in various ways.  A business is created to provide products or services to customers to meet their particular needs for those products or services the business provides.  If a business can conduct its operations effectively, its owners will earn a reasonable return on their investment, and in turn it will create more job opportunities for society.  To successfully run a business it is very important to understand the basic functions for all businesses, as well as the business environment and business process.  In the following two sections we will discuss these key issues.

 

 

Major Function Fields of Business

 

A business organization is defined as an economic and social entity composed of a group of people who interact with each other for the purpose of achieving a common goal. Business involves the creation and distribution of goods, as well as the creation and production of services, with the object of earning a profit. A businessman engages in this process for his own interest.  Most businesses must accomplish similar functions regardless of size, legal structure or industry. These functions are often organized into departments, such as management department, accounting department, marketing department, and so on. Common departments include, but are not limited to, those listed in the following table (Table 1-2).  We will not discuss and demonstrated each of these departments listed in the table but randomly pick up a few departments or functions as examples to illustrate some major function areas of business.

            Management is sometimes listed as a “department” but typically refers to the top level of leadership within the business regardless of their functional role.  The planning and controlling function is one of the most important aspects of any type of business; it is largely concerned with the determination of policy for the plant and following them through production.  The personnel function is conducted by the human resources department, which is in charge of establishing organizational policies, staff development, promotion policies, training programs, remuneration, relationship scheme through trade unions, and counseling.

The engineering department under R&D function in a large business plays an important role by advising management on technical matters.  Research, development and design of the product function are often performed under the engineering department. Manufacturing is primarily concerned with the conversion of raw material into finished or intermediate goods. In other words it is the creation of utility in form.  Purchasing is one of the highly important functions in a manufacturing organization. There are several specialists in their respective fields in the purchasing department who also increase the efficiency of work and help to maintain reasonable product prices.

Table 1-2 Business Functions/Departments

 

Function/Department

 

Responsibilities

Human Resources

Responsible for hiring, firing, payroll, benefits, etc.

 

Finance 

 

Responsible for managing the enterprise’s financial resources.

Budgeting and Forecasting 

 

Planning how the enterprise wants things to happen.

Cash and Treasury Management 

 

Ensuring the enterprise has money when it's needed.

 

Accounts Payable and Receivable

Ensuring the enterprise receives what it is owed and pays what it owes.

 

Tax Planning/Filing and Reporting 

 

Meeting obligations to the government.

 

Risk Management 

 

Ensuring the enterprise doesn't get surprised by something unfavorable.

 

External/Internal (Management) Reporting

 

Providing visibility into the enterprise for those who need it through financial reporting and other types of reporting.

 

Marketing and Sales 

 

 

Responsible for selling the business' goods or services to the customer and for managing the relationships with the customer.

 

Production

Produces the raw materials into the delivered goods, if they require processing.

 

Customer Service

Supports customers who need help with the goods or services

 

Procurement 

Responsible for acquiring the goods and services necessary for the business.

 

Purchasing

Processes the purchase orders and related transactions.

 

Research and Development

Tests to create new products and to determine their viability (e.g. pilot plants), the engineering department is usually under this function.

 

Information Technology

Manages the business' computer and data assets.

Communications/Public Relations 

Responsible for communicating to the outside world.

Administration 

Provides administrative support to the other departments (typing, filing, etc.)

Internal Audit 

Typically accountable to the Board of Directors for reporting on the proper functioning of the other departments

Table 2

 

Accounting is the summary and analysis of the firm’s financial condition and is used to make various business decisions.  This department performs a professional service to the business and the CFO or chief accountant is in charge of this department. The accounting department conducts and supervises the financing, costing, budgeting and record keeping.  Finance is the means by which firms obtain and use funds for their business operations.  It is the most important function in a private enterprise by which all the activities are conducted.  Information systems include information technology; people and procedures that provide appropriate information so that the firm’s employees can make business decisions.[xi]

Marketing  is typically responsible for promoting interest in, and generating demand for, the business’ products or services, and positioning them within the market.  The sales staff in the marketing department focuses on finding likely purchasers and obtains an agreement known as a contract to buy the firm’s products or services.   It is necessary for us to address that although all the function areas listed in the Table 1-2 may not be equally important to a particular business, they are closely connected and often work together to solve specific business problems.  As such, it is very common for firms to break the business functional boundaries and establish working teams that are cross-functionally oriented.   

 

 

Business Environment

 

An environment can be defined as anything which surrounds a system.  Therefore, the business environment is anything which surrounds the business organization. It affects the decisions, strategies, processes and performance of the business.[xii]  It is a set of factors, such as political, economic, social and technological (PEST) forces that are largely outside the control and influence of a business and that can potentially have both a positive and a negative impact on the business.  Today’s world is a rapidly changing place.  Developments across a range of factors will have an impact on a business or an industry. The classic PEST framework identifies four major categories of external factors that affect the ability of a business to survive and prosper.[xiii]

The success of a business is generally dependent on the business environment.  Even after a business is created, its entrepreneurs and managers must continually monitor the environment so that they can anticipate how the demand for its products or its cost of producing products may change.  Jeff Madura in his book Introduction to Business segmented the business environment into four parts, namely social environment, industry environment, economic environment, and global environment.  In this book we will adopt Madura’s four categories of business environment analysis.[xiv]

 

 

Social Environment

 

The social environment, which includes demographics and consumer preferences, represents the social tendencies in which a business has to operate.  The demographics, or characteristics of the population, change over time.  As the proportion of children, teenagers, middle-aged consumers, and senior citizens in a population change, so does the demand for a firm’s products.  Therefore, the demand for the products produced by a specific business may increase or decrease in response to a change in demographics.  For example, an increase in the elderly population has led to an increase in demand for many prescription drugs. 

Changes in consumer preferences over time can also affect the demand for the products produced.  Consumer preferences and choices are highly influenced by technology.  For example, the availability of pay-per-view television channels may cause some consumers to stop renting DVDs. The ability of consumers to download music may cause them to discontinue their purchases of CDs in retail stores.  As technology develops, demand for some products increases, while demand for other products decreases.  Many business firms closely monitor changes in consumer preferences so that they can anticipate the changing needs of consumers and increase their profitability as an outcome.[xv] As an aside, this is one of the main areas where anthropologists can have play a role, i.e. defining the business someone is in, consumer behavior, etc.

The improvements of one’s level of education and the availability of good jobs have provided many with an opportunity to move to a higher social class or to adopt a more affluent lifestyle.  Since there is a positive correlation between one’s social class and one’s level of spending, the higher one’s social class, the higher the demand for consumer goods.  A similar logic applies to lifestyle and spending. Overall, such increased consumer demand means more opportunity available for business, and the success of a product or service  in the market will depend upon which target groups it serves best. Therefore, understanding issues like social class and lifestyle can provide vital insight towards the ultimate success of a business.

There are marked differences in the characteristics of social classes among countries. However we can make a certain categorization as a guideline to understand the lifestyles, even though the characteristics are not perfectly matched with characteristics of a particular community.    A number of studies have been conducted on this topic, including VALS (Values and Life Style Study), in several countries.[xvi] Not knowing the lifestyle of people in a certain society may lead to business failure.  The failure of a global product to succeed in a local market frequently happens because the products may be inappropriate to the needs of the local people.

For example, the electric razor produced by Philips was not successful in Japan’s market because its size was too big for the hand of most Japanese men.  Similarly the coffee brewer produced by Philips was too big for Japanese kitchens, since most people in Japan live in small houses.  Another example is American orange juice that was unsuccessfully introduced in France, since it was not a habit of people in France to drink orange juice for breakfast.  Greeting cards produced by Hallmark were also not successful in the French market, because many people in France create their own greeting cards. Frozen pancakes by Kellogg faced a similar problem in England. Before eating the pancake, it should be warmed in a toaster.  However, most people in England do not have a toaster, which is a common phenomenon in England but is often ignored by the business professionals.[xvii]

 

 

Industry Environment

 

The industry environment refers to the conditions within the firm’s industry to which it’s exposed.  The conditions in each industry vary according to demand and competition.  Firms benefit from being in an industry that experiences a high consumer demand for its products.  For example, the demand for cell phones is very high, which will benefit all the firms that produce cell phones, albeit to varying degrees.  However, industries that have a high demand for their products also tend to have substantial competition which forces them to keep their prices relatively low in order to compete, which may result in lower revenue and, therefore, lower profits. 

Intense competition between rival firms specifies the industrial environment of a business firm. Competitive dynamics involve the moves and counter moves executed by competing firms.  Industry environmental analysis involves studying the strategies and moves of rival firms; assessing the opportunities and threats for a business.  To gain a competitive advantage, it is imperative for the business to conduct a competitive analysis wherein the moves and strategies adopted by rival firms are carefully studied.  Such analysis helps to ascertain the position of the organization in the industry environment versus the competing firms. [xviii]

Of course, moves within an industry environment are not always consistent with consumer demands and trends in the social environment. Greatest benefit may come when there is synergy between them.

 

 

Economic Environment

 

The economic environment for a business encompasses such factors as productivity, income, wealth, inflation, balance of payments, pricing, poverty, interest rates, credit, transportation, and employment.  It refers to the totality of the economic surroundings or conditions that affect a business firm’s markets and its opportunities.[xix]   All businesses are operated within certain economic surroundings, and as such economic conditions have a strong impact on the performance of every business firm.  When the economy is strong, employment is high, and compensation paid to employees is also high.  When people have relatively good incomes under better economic conditions, they are able to make more purchases and thus increase demand. 

The firms that produce these products therefore will benefit from the large quantity of demand and will be more profitable.  Because the firms are more profitable in better economic conditions, they tend to hire more employees to ensure they are able to produce a sufficient amount of products to satisfy the large demand.  Also, because firms are most likely to be profitable, they are willing to pay higher wages to their employees, which in turn will motivate and stimulate the employees to work more efficiently and increase the working/product quality. The increased working efficiency and quality will then help to bring more profits to the business firms.

When the economy is weak, firms tend to lay off some of their employees and cannot afford to pay high wages to their workers.  Since people have relatively low incomes under such bad economic conditions, their purchasing power becomes weak and they can only buy small amounts of products.  The firms that produce these products are adversely affected because they cannot sell all the products that they have produced.  As a result, they may need to lay off more employees.  Under these circumstances, some firms have to close to avoid further loss, and all of their employees lose their jobs.  The unemployment rate rises as an outcome and thus worsens the overall economic conditions, which in turn will generate a strong negative impact on the firms that are still in operation.  Business profitability is definitely influenced by the economic environment. 

Of course, not all businesses will experience a downturn during bad economic times. Those that pay closest attention to the volatility of consumer demands or who are able to adapt most quickly to changing conditions may be spared from negative impact. Indeed, some businesses may actually do better during bad economic times. Understanding business profitability is important on a case by case basis. Take, for example, security monitoring devices. During bad economic times, there is a common perception that crime rates climb. Businesses selling home security home equipment may actually see an increase in the demand for their product in certain neighborhoods and areas. Understanding social trends is also an important aspect of understanding economic environment and measuring a potential for business success. Much will depend on the scale of the business, and there may also be differences between national economic trends and more local ones.

 

 

Global Environment

 

Since the arrival of the 21st century, globalization has influenced people all over the world. The world has become borderless with the availability of high-speed transportation and the advent of information technology. Since modern technologies such as television and the internet have been used extensively for marketing products and services, the spread of lifestyles from one country to another has become intense.  People are able to see a lot of similarities in the products other people use and the foods they eat.  The Western culture and lifestyle is exported to the developing countries, such as the countries in the eastern part of the hemisphere. KFC, McDonald, Pizza Hut, and Burger King are among the fast-food restaurants that can be found in different countries. [xx]

Meanwhile, it is easy to find out that many high technology firms have extended their operations globally, for instance, Microsoft’s High Tech & Electronic Group has established its research and development branch offices or institutions in many countries from Europe to Asia, from South America to Africa.  These high tech companies, through marketing their products and service all over the world, helped to create and enhanced global business environment.   The global business environment can be defined as the environment in different sovereign countries, with factors exogenous to the home environment of the organization which influence decision making on resource use and capabilities.  These include the social, political, economic, regulatory, tax, cultural, legal, and technological environments. The global environment can affect all firms directly or indirectly.  Some firms rely on foreign markets for some of their supplies, or to sell their products in various countries.  They may even establish subsidiaries in foreign countries where they can produce products and sell them.  Even if a firm is not planning to sell its products in foreign markets, it must be aware of the global environment because it may face foreign competition when it sells the products locally.[xxi] 

Every country in the world follows its own system of law. A foreign company operating in one particular country has to abide with that country’s system of law as long as it is operating in that country.  The technological environment comprises factors related to the materials and machines used in manufacturing goods and services.  Receptivity of organizations to new technology and adoption of new technology by consumers influence decisions made in a business organization.  As firms have no control over the foreign environment, their success depends upon how well they adapt to the foreign environment. A firm’s ability to design and adjust its internal variables to take advantage of opportunities offered by the global environment, and its ability to control threats posed by the same environment, determines its success. 

Moreover, global economic conditions can affect local economic conditions.  If economic conditions weaken in foreign countries, the foreign demand for local products will decrease, and this may result in some layoffs by the local companies.  Taking Us as an example, when economic situation in foreign countries becomes poor, the foreign demand for US products will drop down.  The general income level in the United States will the decline, and U.S. consumers will have less money to spend.  The demand for all products will decline, even those that are sold only in the domestic markets.  As such, even firms that have no international business can be affected by the global environment.  We will further discuss the global environment issues in Chapter 10.

 

 

Business Plan, Business Process, and Business Responsibilities

 

 

Business Plan

 

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and a plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.  The business goals being attempted may be for-profit or non-profit. For-profit business plans typically focus on financial goals.  Non-profit and government agency business plans tend to focus on service goals, although some non-profits may also focus on maximizing profit. Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community.  A business plan having changes in perception and branding as its primary goals is called a marketing plan.

Business plans may be internally or externally focused.  Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders.  They typically have detailed information about the organization or team attempting to reach the goals.  With for-profit entities, external stakeholders include investors and customers.[xxii]  External stake-holders of non-profits include donors and the clients of the non-profit's services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization.  An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors.  This allows the success of the plan to be measured using non-financial measures.  Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.  Operational plans describe the goals of an internal organization, working group or department.[xxiii] 

            Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project's place within the organization's larger strategic goals.  Good business plan should contain a section about environment analysis and make a statement on how the proposed business plan fits in the social, economical, cultural, and technological environment. A business plan might be failed if it ignores the environmental analysis. 

 

 

Business Process

 

A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers.  Davenport defines a business process as a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to an emphasis on product focus.  A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action.  Taking a process approach implies adopting the customer’s point of view. [xxiv]

Processes are the structure by which an organization does what is necessary to produce value for its customers.  This definition contains certain characteristics a process must possess.  These characteristics are achieved by a focus on the business logic of the process (how work is done), instead of taking a product perspective (what is done). Following Davenport’s definition of a process, we can conclude that a process must have clearly defined boundaries, input and output, that it consists of smaller parts, activities, which are ordered in time and space, that there must be a receiver of the process outcome- a customer - and that the transformation taking place within the process must add customer value.

To Hammer and Champy a process is a collection of activities that output something valuable to the customers by taking various factors of production as input.  It is clear that Hammer and Champy’s perception of process is more transformation oriented, which put little emphasis on the structural component, which views process boundaries and the order of activities in time and space. Their definition can be considered as a subset of the definition by Davenport.[xxv]  Rummler and Brache use a definition that clearly encompasses a focus on the organization’s external customers, when stating that a business process is a series of steps designed to produce a product or service. Most processes are cross-functional, spanning the “white space” between the boxes on the organization chart. Some processes result in a product or service that is received by an organization's external customer. We call these primary processes. Other processes produce products that are invisible to the external customer but essential to the effective management of the business.  We call these support processes.[xxvi]

The above definition distinguishes two types of processes, primary and support processes, depending on whether a process is directly involved in the creation of customer value, or concerned with the organization’s internal activities. In this sense, Rummler and Brache's definition follows Porter's value chain model,[xxvii] which also builds on a division of primary and secondary activities.  According to Rummler and Brache, a typical characteristic of a successful process-based organization is the absence of secondary activities in the primary value flow that is created in the customer oriented primary processes. The characteristics of processes spanning the white space on the organization chart indicate that processes are embedded in some form of organizational structure. Also, a process can be cross-functional, i.e. it ranges over several business functions.

Johansson et al. define a process as a set of linked activities that take an input and transform it to create an output. Ideally, the transformation that occurs in the process should add value to the input and create an output that is more useful and effective to the recipient, either upstream or downstream.  This definition emphasizes the constitution of links between activities and the transformation that takes place within the process.  Their model also includes the upstream part of the value chain as a possible recipient of the process output.[xxviii]  In summarizing the four definitions above, we can compile the characteristics for a business process into the following table (Table 1-3).

 

Table 1-3 Business Process Characteristics

Characteristic

Description

 

Definability

 

It must have clearly defined boundaries, input and output.

Order

It must consist of activities that are ordered according to their position in time and space.

 

Customer

 

There must be a recipient of the process' outcome, a customer.

Value-adding

The transformation taking place within the process must add value to the recipient, either upstream or downstream.

 

Embeddedness

A process cannot exist by itself, it must be embedded in an organizational structure.

 

Cross-functionality

A process regularly can, but not necessarily must, span several functions.

Table 3

 

A business process begins with a customer’s need and ends with a customer’s need fulfillment. Process oriented organizations break down the barriers of structural departments and try to avoid functional silos. A business process can be divided into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super-process.  The analysis of business processes typically includes the mapping of processes and sub-processes down to the activity level.  There are three types of business processes need to be emphasized: 1) a management process is the process that govern the operation of a system. Typical management processes include “corporate governance” and “strategic management”; 2) an operational process is the process that constitutes the core business and creates the primary value stream. Typical operational processes are purchasing, manufacturing, marketing, and sales; 3) a supporting process which supports the core processes. These include accounting, recruitment, and technical support.

Business Processes are designed to add value for the customer and should not include unnecessary activities. The outcome of a well designed business process is increased effectiveness (value for the customer) and increased efficiency (less costs for the company).  Business processes can be modeled through a large number of methods and techniques.  For instance, the Business Process Modeling Notation is a Business Process Modeling technique that can be used for drawing business processes in a workflow.  In the early 1990s, US corporations, and subsequently companies all over the world, started to adopt the concept of reengineering in an attempt to re-achieve the competitiveness that they had lost during the previous decade. A key characteristic of Business Process Reengineering (BPR) is the focus on business processes. [xxix]

 

 

 

 

Business Ethics and Responsibilities

 

Until more recently many business firms viewed business ethics only in terms of administrative compliance with legal standards and adherence to internal rules and regulations.  In today’s business world the situation is different.  Attention to business ethics is on the rise across the world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers.  Like never before, business firms are being asked, encouraged and prodded to improve their business practices to emphasize legal and ethical behavior.  Companies, professional firms and individuals alike are being held increasingly accountable for their actions, as demand grows for higher standards of corporate social responsibility. [xxx]

Business responsibility, also termed corporate responsibility, is a topic that can cover a number of areas and has been a debatable subject for several decades since Friedman published his article arguing that the social responsibility of business is to increase its profits.[xxxi]  Basically, we all have responsibility for people, animals and the environment.  Businesses have similar responsibilities as social economical organizations.  In many situations businesses take the lead in these areas because they have the money and/or the power to get things done.  The key is to be aware of the concept of responsibility and take that responsibility seriously. [xxxii]

The behavior of business firms is molded by their business ethics or set of moral values.  Each business firm has a social responsibility, which is the firm’s recognition of how its business decisions can affect society.  The term social responsibility is sometimes used to describe the firm’s responsibility to its community and to the environment.  It can also be used more broadly to include the firm’s responsibility to its customers, its employees, its stockholders, and its creditors.  The business decisions a firm makes are mainly intended to increase its profitability and value, these decisions are not supposed to violate its ethics and social responsibilities. 

Business firms have a responsibility to produce safe products that should be both friendly to our social environment and physical environment, in addition all the business firms should take up their social responsibilities and  sell their products without misleading the customers.  They ensure social responsibility toward customers by establishing a code of ethics, monitoring customer complaints, and asking customers for feedback on products purchased from them.  Businesses have a responsibility to provide safe working conditions, proper treatment, and equal opportunities for employees.  They can satisfy their employees by enforcing safety guidelines, offering seminars on diversity, and establishing a grievance procedure that allows employees to report complaints.  Firms have a responsibility to provide profits to the owners or stockholders for their investments in the business.  They attempt to ensure that managers make decisions that support the stakeholders’ best interests. 

Business firms have the responsibility to meet their financial obligations to their creditors.  This responsibility includes not only paying their debts but also not supplying creditors with misleading information about their financial conditions.  Moreover, business firms must take their responsibility to the environment and the local community seriously.  They are responsible to maintain a clean environment when operating their businesses. Although to maintain the clean environment they may incur extra expenses which may lower their profitability.  Finally, all business firms should show responsibility to the local communities where their customers and employees live.  They provide donations and benefits to these communities, and thus make their contributions to local community development.[xxxiii] 

 

 


 
Notes will be provided upon requesting!

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