The influence of an ERP system on the value chain
process of multinational enterprises (MNEs)
by
Folo Ralph - Bosombo
SHORT DISSERTATION
Submitted in partial fulfilment of the requirements for
the degree
MASTER OF BUSINESS ADMINISTRATION
(MBA) in BUSINESS MANAGEMENT in the FACULTY OF MANAGEMENT at
the UNIVERSITY OF JOHANNESBURG
Study Leader: Mr H.B. Klopper
December 2006
Abstract
The study set out to assess the influence of enterprise
resource planning (ERP) system software on the value chain process of
multinational enterprises (MNEs). This was achieved through the literature
review that addressed the relation between the value chain approach as a
strategic tool and ERP system theory. The ERP system is positioned as a total
solution for the MNE, and it contains the best business practices that are
derived from the various generic business functions of the value chain
architecture and configuration. A set of research hypotheses was developed,
which were tested in accordance with the research methodology and the design
issues for the qualitative study. The different chapters evolved along with a
case study of an ERP system, namely Axapta software. For the quantitative
study, preliminary interviews were conducted to select the MNEs that use SAP
software. Thereafter a self-administered survey was applied relating to the
strategy and the value chain integration through the ERP system to the MNE's
ERP system users. The research results in the qualitative study show that for
ERP software to integrate the MNE's functional activities and processes in the
value chain system globally and effectively, it has to position itself as a
value chain system with e-business mechanisms. In addition it has to suit the
global ERP characteristics as an information interchange, sharing and service.
It has to be a flexible and comprehensive, modular, open, integrated and
multifunctional system, with an option to customisation in selecting modules
that best suit the MNE's management to craft its business's activities. The
above was proved through the analyses of Axapta software attributes by means of
a technical strategic planning tool, namely the value chain approaches, and the
strategic supply chain factors for ERP software evaluation. Axapta software met
the requirements of a general and global ERP system model and it is indeed a
value chain system. The following statement can be cited as the most important
findings of the qualitative study: For the MNE to derive value from ERP system
integration and utilisation, the strategic information technology (IT) plan has
to be formulated and followed in order to measure the beneficial cost and
efficiency of implementing the ERP system, and to assess the suitability of ERP
software during the selection process in accordance with the MNE's objectives
that will facilitate the success of ERP implementation usage. ERP software
adopted for the MNE has to include the international architecture and
configuration types that align with the MNE's strategy and Internet
application. This must include all the necessary value chain functional modules
relating to the ERP system as an integrating tool that will influence the MNE
to align its strategy to gain
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competitive advantage. Consequently, such an ERP system will
allow the MNE to strengthen and integrate all its applications and activities
in the value chain system. As a result the different organisational suppliers
and partners must be linked with the MNE's value chain system to enhance the
operational sites' users to operate efficiently, more reliably and in
co-ordination with the MNE. The necessary information and data must be
available across the entire organisation's system from the trading partners to
the customers so that they can be satisfied on with the necessary urgency. In
the statistical analysis conducted from the self-administered survey, the major
finding is the positive view of the employers and employees of the
customisation of ERP, i.e. SAP software, which helps MNEs to craft the software
according to their objectives and with the use of a strategic IT plan.
In conclusion the study highlighted the inseparability of ERP
system theory from the value chain approaches. Therefore, the study came to
position ERP system theoretically as an evaluative tool and technically as a
value chain system that becomes an evaluative tool for ERP software activities
assessment. Moreover the study pointed out the importance of the use of a
strategic IT plan within the MNE. However, the main contribution and value of
this study is obviously to assist any MNE in the process of migrating business
systems. The methodical approach facilitates the selection and the evaluation
of ERP software requirements within an organisation, which can meet its growth
targets and objectives. Thus, the strategic supply chain factors for ERP
software evaluation and the application of the value chain approaches discussed
in this study will contribute to the acquisition of fit and compatible ERP
software. The choice of the right ERP software will definitely allow MNEs to
derive the benefits of the ERP system across its entire value chain sites
(nationally and internationally). It can be concluded from this study that any
organisation wanting to invest in ERP system implementation must apply the
methodical approach formulated in this study by the researcher. It is
recommended that the assessment of an ERP system's modular and functional
activities, together with the organisation's value chain activities, be given
priority before the acquisition and adoption of the ERP system.
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Declaration
I declare that this short dissertation is my own, unaided
work. It is being submitted in partial fulfilment of the requirements for the
degree of Master in Business Administration (MBA) in the Faculty of Management
at the University of the Johannesburg. It has not been submitted for any degree
or examination in any other University.
Signed at on this day 2006
Signature
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Acknowledgements
I would like to extend my special thanks to the following people
and organisations for their encouragement and support during the completion of
this study:
· My supervisor, HB Klopper, for his professional
assistance and advice during the entire process.
· To the Statkon staff, especially Riette and Adam for
their assistance and advice on the development of the questionnaire and the
statistical process of the research data.
· To Glenda Buncombe for her assistance in language editing
of this dissertation.
· To my wife Lowa Bibi and my girls: Lokando Folo-Rachel,
Yenga Folo-Princilla and Shupamba Folo-Angel, colleagues and friends.
· To all MNE personnel (CIOs, managers and end-users) who
participated in the preliminary study and the self-administered survey.
· To my parents in the Democratic Republic of Congo
(D.R.C). La vision de Kisangani -l' esprit invisible de la destinee
Congolo-Zairoise. And Folo brothers in South Africa, for all their love and
support during this period.
My gratitude to God through my ancestors for all his blessings
and inspiration.
Folo Ralph - Bosombo
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