The Business Firm as a System

System Characteristics of Business Firms Objectives Environment Constraints Input-Process-Output Feedback Controls Subsystems

Major Subsystems 1. Organizational Structure - It shows how the tasks are divided, grouped and coordinated. An organizational chart is a diagram that depicts an organbizational structure. 2. Information System - The information system can be depicted as a group of related subsystems, such as the production information system, the accounting information system, and the marketing information system. 3. Operational Sytem - The operational system of a firm is the collection of primary physical processes.

The Operational System of a Manufacturing Firm

Organizational Structures Hierarchal Structure - The activities and operations of a firm are subdivided, with the levels of management being arrayed vertically. Matrix Structure - It blends functional and project oriented structures. Decentralized Structure - A considerable degree of authority is delegated to middle-level and lower level managers within the structures. Network Structure - It represents an interconnected but non-hierarchal structure that is both flexible and fluid. Operational System - An operational system is a term used in data warehousing to refer to a system that is used to process the day-to-day transactions of an organization. These systems are designed so processing of day-to-day transactions is performed efficiently and the integrity of the transactional data is preserved. Operational Systems vs. Data Warehousing The fundamental difference between operational systems and data warehousing systems is that operational systems are designed to support transaction processing whereas data warehousing systems are designed to support online analytical processing (or OLAP, for short). Based on this fundamental difference, data usage patterns associated with operational systems are significantly different than usage patterns associated with data warehousing systems. As a result, data warehousing systems are designed and optimized using methodologies that drastically differ from that of operational systems.

A Comparison Of Operational Systems And Data Warehousing Systems Operational Systems Operational systems are generally designed to support highvolume transaction processing with minimal back-end reporting. Operational systems are generally process-oriented or processdriven, meaning that they are focused on specific business processes or tasks. Example tasks include billing, registration, etc. Data Warehousing Systems Data warehousing systems are generally designed to support high-volume analytical processing (i.e. OLAP) and subsequent, often elaboratereport generation.

Data warehousing systems are generally subject-oriented, organized around business areas that the organization needs information about. Such subject areas are usually populated with data from one or more operational systems. As an example, revenue may be a subject area of a data warehouse that incorporates data from operational systems that contain student tuition data, alumni gift data, financial aid data, etc. Data warehousing systems are generally concerned with historical data. Data within a data warehouse is generally non-volatile, meaning that new data may be added regularly, but once loaded, the data is rarely changed, thus preserving an evergrowing history of information. In short, data within a data warehouse is generally read-only. Data warehousing systems are generally optimized to perform fast retrievals of relatively large volumes of data.

Operational systems are generally concerned with current data. Data within operational systems are generally updated regularlyaccording to need.

Operational systems are generally optimized to perform fast inserts and updates of relatively small volumes of data. Operational systems are generally application-specific, resulting in a multitude of partially or nonintegrated systems andredundant data (e.g. billing data is not integrated with payroll data). Operational systems generally require a non-trivial level of computing skills amongst the end-user community.

Data warehousing systems are generally integrated at a layer above the application layer, avoiding data redundancy problems.

Data warehousing systems generally appeal to an end-user community with a wide range of computing skills, from novice to expert users.