The REA Enterprise Ontology:
Value System and Value Chain Modeling
R1. What is a business process? Describe each of the major business processes
found in most enterprises.
A business process is a group of related activities an organization performs to
provide goods and services to customers.
Regardless of the type of good or
service an organization provides, each organization has three broad business
Acquisition/Payment Processes - acquiring, maintaining, and paying for
resources needed by the organization (e.g. human resources, financing,
property, plant, equipment, materials and supplies) to provide goods and
Conversion Process - converting the acquired resources into goods and
services for customers.
Sales/Collection Process - delivering goods and services to customers and
R2. What does it mean to create value? How do enterprises create value?
In his book
, Michael Porter explains that everything an
organization does should create value for its customers.
seeks to create value by providing goods and services that customers want.
They accomplish this through a series of business processes, e.g.,
acquisition/payment process, conversion process, and sales/collection process.
Leaders of an organization are responsible for managing the business
An information system with several information processes provides
information to help management plan, execute, evaluate, and control the
Creating value incurs costs for the organization.
For example, assembling an
automobile creates value but it also requires the organization to pay for various
costs (e.g., materials, supplies, and time of employees).
Whether profit or not-
for-profit, viable organizations provide goods and services that customers value
in a cost-effective way.
Solutions Manual to accompany
Dunn, Enterprise Information Systems: A Pattern Based Approach, 3e