Task 1
Information system refers to the process, software, system or databases which stores large amount of data in a systematic for and channels it to the need of purpose in an organized and timely manner. Information and communication are the vital part of business information. It creates a significant part on business information and growth (Ngai, Chau and Chan, 2011). Organizations adopt innovative means of communication aspect in order to develop high success measures. The present report is based on BHP Billiton Company which is headquartered at Melbourne, Australia. They are considered as the largest natural resources company in Australia. The company has been using ERP software for the accounting and recording of transactions. It can support all business operation and processes including marketing, financial, human resource and manufacturing.
BHP Company has dual listed structure in their organisation. BHP Company has two entities which includes BHP Billiton Limited and BHP Plc. Both the companies have their own existence but they operate as on. They have same headquarters which is located in Melbourne. All the decisions are taken by the same Board. Furthermore, shareholders in both the companies have equal voting rights and economic rights in the whole group. It has created many problems for the company because it is difficult to take decisions. According to Prajogo and Olhager, 2012, “Centralized accounting and reporting system has increases the chances of errors and omissions” (Prajogo and Olhager, 2012). There are many levels of management which has affected the control and monitoring system of both the companies. It is for the same reason that BHP Group has decided to simplify their organizational structure. It will reduce their cost and their productivity will improve.
The company has been facing many problems due to their organizational structure. It has reduced their efficiency and productivity. Dual structure of BHP Company has resulted in internal complexities. The employees have no idea about their superiors. As a result, the employees receive orders from different supervisors from different departments. The dual communication and authority causes decision in managers and workers (Gorla, Somers and Wong, 2010). It has created ambiguity in the operational department. The management was ineffective due to miscommunication and lack of clear instructions. Dual structure increased the cost as the company found it very expensive to maintain. The overhead of the company increased due to dual management. The extra cost and expenses affected the efficient resource utilization objective of the company. As per Gorla, Somers and Wong, 2010), “Scarce resources increases the pressure on the production department which affected the quality and efficiency of the workers” (Gorla, Somers and Wong, 2010). Therefore, the company decided to change their structure and they adopted a simpler organizational structure in their organisation.
It has been analyzed that there is a significant difference between information system and strategic information system. The former whereby focuses on collecting storing and transferring information, Later focuses on channeling the information to business needs and strategic development. Hazen and Byrd, (2012) revealed that the three major kind of information system managed by the organizations are categorized into financial system, operational system and strategic information system. Financial systems as the name suggests are the computerized system which focuses on managing budget, costs and accounting aspects of the business. BHP Company should use ERP software packages in their business. These specialized systems are developed and managed to control the costs, manage profits, analyze payrolls etc. As a critical part of business activity only few people are involved in the system for attaining well defined business results (Wong and Karia, 2010). Commercial systems on the other hand are those which monitors and control the day to day business activities. These computerized programs manage the routine based programs of the businesses to maintain daily run of the organization. The core objective of these programs is to control the operations while keeping it cost effective (Prajogo and Olhager, 2012). Custom systems however are the ones in which business strategies are developed using information technology and involvement of the management. It focuses on attaining the competitive market edge by effectively planning and managing the business operations using effective analyzing tools and techniques. But it will increase the cost of the company. Therefore, it is advisable for BHO Company to use ERP software in their business.
1.1 Organizational structure
The biggest problem that BHP has been facing is their tax avoidance and planning. They need specialized software such as ERP which can allow them to plan and understand their tax structure. The company has failed to monitor their own operations by using financial information. Furthermore, there were many problems in the sales process of the company Hazen and Byrd, (2012). Customer feedback system had many issues. Many customers would under report about a product or service in the hope of getting discounts. Some of the customers over-reported so as to get more quantity of goods. Another problem was that BHP Company gave fewer opportunities to their regular customers to show their preferences and needs. They had no system or software to check whether the right goods were delivered to the right party or not. BHP Company had lot of complexities which made their entire sales process non-transparent. Even the regular customers were dissatisfied with the services Salehi, Rostami and Mogadam, (2010).
BHP Company should adopt ERP software in their business. It will bring much improvement in their financial area. High level of completion and complexity in business requires continuous improvement and changes. Financial department should use ERP to update their financial data in an effective and precise manner. According to Salehi, Rostami and Mogadam, 2010, Inclusion of ERP in the business will provide flexibility to the company in taking decisions. The accounting information will be more reliable and updated which will improve the planning and execution” (Salehi, Rostami and Mogadam, 2010). BHP Company can use independent connections which will allow them to integrate wide range of activities. BHP Company can start integrated business process which will create a central database for them. It will reduce the chances of data duplication which has been a major problem for BHP Company. It is easy to use and powerful tool which builds reporting in the entire organisation. It will reduce operations and administrative cost for the company. BHP has grown in size and their business has become more complex (Melville, 2010)). EPR software will automate their business operation and they will get accurate information. It is also possible for the firm to coordinate the activities within different departments. ERP systems can be altered according to the needs of the company. It is very helpful when the business grows and requires more resources.
Rio Tinto has been a market leader in Australia because they have adopted SIS system in their business. SIS is a well defined and systematic means of carrying out business operations while ensuring the profitability and growth of the business units. The process effectively manages to attain high and significant competitive advantage for the business. Analysis of different models and techniques help companies in effectively defining the business issue and carry out well defined measures to attain an edge within the market. According to Melville, (2010) competitive advantage through SIS is attained in an effective and well defined manner. Different business attains the competitiveness in different manner. Tallon, (2011) evaluated that use of SIS helps in enhancing cost effectiveness for the organizations thus creating a significant growth and development aspect within the market. Effective planning and use of technology has helped Roi Tinto in enhancing the speed while minimizing the wastage of time and resources. The resultant thus is high quality products and services and high return of investment. Different aspect of cost saving are involved in the overall process of SIS which has given Rio Tinto a significant competitive advantage over BHP Company (Hazen and Byrd, 2012).
1.2 Operational problems due to structure
Chen and et.al., (2010) analyzed that differentiation is a challenging yet very crucial part of business success in the current market. Analyzing individual needs and demands of the consumers while offering products services accordingly is a great challenge for the business. However systematic planning and development measures have been useful for Rio Tinto in attaining effective differentiation in the market. According to Gorla, Somers and Wong, (2010) systematic planning helps the business in critically analyzing the need of information and resources. Moreover offering high value and unique services to the consumers enhances the chances of business success and growth within the market which in turn helps in developing a competitive market edge.
Innovation is also unique advantage of the process. In the present market situation offering innovative product helps the businesses in attaining first mover advantage. Rio Tinto has adopted this method which has allowed them to become the market leader. Consumer demand for product or services, dramatically rise due to high usability, uniqueness or cost efficiency factors. SIS contributes significantly in the process as the system develops an effective and well defined means of conducting research and planning for business growth. The focus of Rio Tinto on cost cutting, market oriented approach and differentiation enhances innovation strategy widely for the business (Galliers and Leidner, 2014). These strategies provide significant chances for the business to attract a significant consumer base and develop high demand within the market. The opening of a new window of opportunity enhances the elasticity of demand as well which helps the businesses in attaining high competitiveness in the market.
Value chain is a model which creates a significant competitive analysis for business activities and performance in the market. According to Salehi, Rostami and Mogadam, (2010) information technology plays a vital role in determining the business position and development aspects within the market. Major strategies which may help BHP Compny in effectively attaining the competitive edge includes minimizing cost and offering differential services within the market. value chain thus divides company’s activities into technologically and economically distinct activities. It helps in attaining maximum value for the business. This results in effectively determining the amount a consumer is willing to pay for the product and services offered. Kim and et.al., (2011) explained the framework by stating that a business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, BHP Company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium price (Ngai, Chau and Chan, 2011). Nine generic activities of the business hence develop an effective overall process which helps the business in analyzing all the involved activities which are involved from raw material acquisition to after sales services. The analysis of value creation and willingness of buyers to pay the price is determined thus developing an effective measure to gain a competitive edge in the market. A well managed communication helps businesses in making timely and effective business decisions thus saving cost and resources while optimizing the growth aspects of the organization (Hazen and Byrd, 2012). Different authors analyzes information system differently however the core concept of the term reflect information system as components which interact to generate useful information.
Conclusion
It can be concluded from the above report that BHP Company should use ERP accounting system in their business. They should change their organizational structure because it has increased their cost and expenses. They had many problems due to their dual structure. It is for this reason only that the company has changed their structure and they have implemented simpler business structure. ERP software will reduce complexities in different business activities. They will have better control on their business. Apart from this, BHP Company should also use different models in their organization. It will provide them edge over their competitors.
References
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