The Business Firm as a System
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- Marvin Green
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1 Chapter 2: The Business Environment and the AIS The Business Firm as a Environment of the Firm Business Firm Organization Information Operational Organization s functions AIS Transaction Cycles Business Events from Operations Figure 2-1 Characteristics of Business Firms Objectives Environment Constraints Input-Process-Output Feedback Controls Subsystems
2 Examples of AIS Subsystems (Merchandising) Order entry Sales Shipping Inventory Receiving Purchasing/ A. Payable/ Cash Disb. Revenue Cycle Billing/ A. Receivable Cash Receipts General Ledger Ext/Fin. reporting Tax & req. reporting Internal reporting Expenditure Cycle Human Resource (Payroll) No Planning/Control, Investment, or Production Cycles reflected here Examples of AIS Subsystems: Service Firm Revenue Billing/ A.Receivables Cash Receipts Human resource (payroll) Service firm Revenue Cycle General Ledger No Purchasing, Production, Planning/Control, Investment Cycles reflected here Examples of AIS Subsystems: Production Cycle Inventory Production Purchasing/ A. Payable/ Cash Disb. General Ledger Production Cycle Human Resource (Payroll No Revenue, and Investment Cycles reflected here
3 Organizational Structure in Business Firms Hierarchical Matrix: Blend functional and projectoriented structures Decentralized Network A Networked Organizational Structure Consultant Training Marketing Consulting Services Consultant Recruitment Operation Project Team Services Figure 2-5 The Operational of a Manufacturing Firm Facilities Labor (human services) Material from Supplier Acquiring Materials Manufacturing Firm Producing Finished Supporting Operations Storing Finished Shipping Finished to Data Funds Figure 2-7 AIS Data and information flow Physical flows Information Funds
4 Useful Data Elements Concerning a Business Event The nature of the element and when it occurred Which agents were involved What kinds of resources were involved and in what quantities Where the event took place Data : Some Specifics File{ Field 1 Field 2 Field 3 Field 1 Field 2 Field 3 Records Field 1 Field 2 Field 3 Some More Specifics The manual activity of journalizing transactions is equivalent to the computerized recording of transactions in a transaction file In general, manual accounting journals are equivalent to computerized transaction files Similarly, manual general ledger and subsidiary ledgers are equivalent to computerized Master files. e.g., There is typically 1 record in the general ledger for each account in an entity s chart of accounts Examples of Master files include: Accounts Receivable Master File Accounts Payable Master File Inventory Master File
5 Basic Rules of Flowcharting - I 1) The flow begins at the upper left-hand corner of the sheet and generally moves from left to right and from top to bottom 2) All steps are clearly presented in a sequence, or a series of sequences. No obvious gaps in the procedure should be present 3) Symbols are used consistently throughout. Thus the symbol for manual processing (an inverted trapezoid) should appear each time a clerk performs a step in the procedure Examples: What is what? Figure 2-9 Basic Rules of Flowcharting - II 4) The dispositions of all documents and reports are shown. In fact, the final resting place of every copy of every of every prepared document should be specified. Typical dispositions include placing documents in files, sending documents to outside parties such as customers, forwarding documents to connecting procedures (such as a general ledger procedure), and distributing reports to managers. If the disposition consists of destroying a document, this action may be represented in the manner shown below: From prior processing Source Document Destroy Basic Rules of Flowcharting - III 5) The sandwich rule is consistently applied. This rule states that a processing symbol should be sandwiched between an input symbol and an output symbol, in the manner shown below: Input document Manual Process Output document
6 Basic Rules of Flowcharting - IV 6) When a document crosses an organizational line within the flowchart, the document is pictured again in the new organizational unit. However, the repetition is not usually necessary in some instances if the organizational units are adjacent 7) All symbols contain a brief but specific label written inside the symbols 8) Multiple copies of documents are drawn as an overlapping group and are numbered in the upper right-hand corners; these numbers remain the copies during their flows through the procedure Basic Rules of Flowcharting - V 9) Added comments are included within annotation symbols and are attached to appropriate symbols, such as the processing symbols to which the comments are related 10) Ample connections (cross-references) are provided. The symbols used in forming the connections depend on the situation. Thus, if two sheets are needed to to contain the flowchart, the flows between pages are formed by off-page connector symbols. In those cases where the procedure being flowcharted links to an adjoining procedure, the connection can be formed by a terminal symbol Basic Rules of Flowcharting - VI 11) Exceptional Occurrences, such as back orders, are clearly noted. They may appear as (i) comments within annotation symbols, (ii) separate flowcharts, with references to the main flowchart, or (iii) decision branches, as shown below: Reject Order Rejection Letter To From prior processing Credit Satisfactory? Accept Order Acknowledgement To Sales Order To sales Order Processing
7 Thanks.
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