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Business Processes

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Roles and responsibilities must be translated into a set of processes in order to facilitate efficient service delivery to end users. A business process under this context is a collection of  related, structured activities or roles that result to a specific service or product for a specific customer or customers. The main processes involved entail the management of risk, collection of insurance and establishment of the appropriate documentation in order to complete safe shipment procedures of goods and services. Risk assessment and control is also necessary towards the accomplishment of complete business transactions. All business process have to take into account the risk involved in order to manage the risk and complete the processes successfully. Risk assessment has to be carried out in all business processes. Some of the activities involved achieving the objectives of a business venture as well as meeting the needs of consumers include: market entry, transactions, payments, deliveries, currency control risk and property/marine risk management. Each of the activity is explained in detail in order to show its significance in the business process (Hall  58).

Business process

A business process normally starts with a mission objective and is completed after realization of the intended objective. Process-oriented firms break down the bottle necks of structural departments and make effort to prevent functional silos. a business process can be broken down into several sub-processes which are all essential in the accomplishment of intended business objectives. The assessment of business processes normally entails the mapping of processes and sub-processes down to activity level. Business processes are intended to add value for the customer and should exclude all activities that are not necessary. The end result of a well designed business process is enhanced efficiency and effectiveness in meeting the needs of the customer. This is measured by considering the value added to the customer and the reduced operational costs for the firm (Hall 58). Some of the processes include:

Process Chain

Process chain is the sequential sub-processes or tasks with alternative paths based on particular conditions in which business transactions are carried out to achieve the intended objectives. These alternative paths are followed in order to achieve the intended objectives or produce a given output. Every process has its unique inputs and outputs which are different from other processes’ requirements. Business processes are formulated to be implemented by one or more business functional units and focus on the significance of the process chain instead of individual units. In general, the various activities in a business process are executed either manually or by employing a business data processing system like ERP systems. Some activities will be executed normally while others will require computer-based systems in order to be executed normally. All these activities may be sequential in the execution of the business process. The data or information that passes through the process  may require both manual and computer-based operations in the completion of the process (Hall 60).

In order to explain the processes involved in business transactions, it is necessary to describe the various areas that the process are set to improve (Hall  60).

Process Improvement Areas

Despite the level of activity in any business process, it is worth noting that the process as a whole is formulated to and consistently reviewed or improved to achieve a continuous development in four main areas:

1. Effectiveness

2. Efficiency

3. Internal control

4. conformity to diverse statutes and policies


The general effectiveness of a business process is the degree to which the outputs intended from the process are being realized. The first measure of the basic adequacy of a business process is its ability to logically and appropriately meet the expectations of process objectives. One important process that can best be used to illustrate this is the material procurement process. One of its significant activities is the sub-process for supplier  follow-up to ascertain timely deliveries of resources. Such an activity is significantly less effective if it does not offer precise and appropriate purchase order status reports for use by the purchase department staff assigned the role of making the follow-ups (Paul 50).


This can be illustrated by considering the following scenario. Assume that it has been noted that the average time taken to organize and send a purchase order after payments of an appropriately prepared indent from the end-user is inappropriately high, resulting to delayed client deliveries and subsequent customer requests. The process of reverting the client’s align to a purchase order is effective because to some extent a purchase order has been created, but the efficiency is poor because it takes unreasonable amounts of time and expenses in regard to the organization’s resources (Paul 50).

Internal Control

In a scenario where quantities of the main raw materials are frequently ordered and put into use, rates are fixed with chosen, reliable, accepted vendors for an extended duration-normally an year. In addition, the rate contract does not entail a price rising clause. The rate contract information is stored in the ERP system’s database. Whenever materials are to be purchased, purchase orders are to be prepared, quoting the rate described in the rate contract. An internal control is maintained to ensure that the purchase rates are consistent all the year round. A serious or major lapse in the internal control measures will be a situation where the rate on the purchase order as described by the current rate contract is altered to a different value and the same is sent to the supplier. This will lead to higher financial liability for the organization due to the high charges after the alteration. Additional violations of the internal control will also be found if it was discovered that such a PO alteration is actually authorized before sending the document to the supplier

Statutory and Policy Compliance

There are particular situations where payments made to experts or service contractors must be statutorily done after deducting tax at source (T.D.S.). these T.D.S figures must be deposited in government treasury accounts with banks on or before a particular date in the month after the payments are made. In such a situation, if a business process doe not describe the T.D.S. values, and/or fails to make follow ups into deposition into government accounts by the said date, then this is a statutory compliance issue and renders the relevant administrators liable to civil/criminal legal actions (Paul 60).


A transaction is an agreement, communication or movement that takes place between separate entities or parties mainly entailing the exchange of items of value like information, commodities, services and money Pilferage and Containerized Freight and control of currency risk should be considered in all business transactions. A transaction is necessary for the completion of a business process.


Delivery is the process of transporting commodities. Most commodities are delivered via a transportation network. Cargo which s basically the physical goods are principally delivered via roads and railways on land, airline networks in the air and shipping lanes in the waters. Unique types of goods such as liquids are transported through pipelines  electrical power through power grids and computer networks like the Internet or broadcast networks for electronic information. The common process of delivering goods is described as distribution. Logistics is the study of effective processes for delivery and disposition of commodities and personnel. Organizations that specialize in delivering commercial commodities  from the place of manufacture or storage to point of sale are referred to as distributors while those that specialize in the delivery of the commodities from the place of sale to the end users are referred to as delivery services, postal, courier and relocation services. These also deliver commodities for commercial and private interest (Paul 60).

Marine risks and insurance

Marine risks and insurance are two significant processes in the management of risks in business processes. The relevant information in insurance is provided by various clauses.
Transit Clause

It outlines the places of voyage including the beginning of a transit, proceeds in the course of transit and ends on delivery between which the insurance covers. It may include the warehouse to warehouse clause.

Termination of Adventure Clause

This provides for the insurance to be sustained in case the contract of affreightment or the escapade is terminated at a port or place other than the described destination that is before the goods reached the intended destination. This is subject to timely notice provided to insurer and to payment of an extra premium where it is necessary.

Craft Clause

This clause caters for the coverage of  transit by craft, raft or lighter to or from the vessel.
Change of Voyage Clause

It provides for constant coverage in case of alteration of voyage or of any omission or mistake in the explanation of the interest vessel or voyage, subject to disbursement of an extra premium.

Constructive Total Loss Clause

It provides the insurer with the right to compensate the assured for the entire loss when the commodities are so destroyed that the expenses of recovering and overhauling would surpass their original value.
G.A. Clause (General Average Clause)

It provides the rules to guide the settlement, the common average claims and the rescue charges.

Seaworthiness Admitted Clause

It provides that in the course of loss the assured’s right to recovery will not be biased by the fact that the loss could have resulted from a wrongful act or misbehavior of the ship owners or their crews, dedicated without the privities of the assured (Slack et al 45).

Bailee Clause

This stipulates that assured and their agents in all instances to take such initiatives as may be appropriate for the intention of preventing or minimizing a loss and to ascertain that all rights against transporters, bailees or any other third person.

Not to Inure Clause

It bans the assured from handing over any right of recovery in the policy to the transporter or other bailee such as warehouse owner or lorry owner. thus, it safeguards the carrier or other bailee from turning into the assured as a result of such policies of the right of recovery, or else the insurer can not lay claims against them in case of loss or damage.

Both to Blame Collision Clause

It safeguards the assured from any claim that he/she may have due to the of collision.

F.C.&S. Clause
(Free of Capture and Seizure Clause)

It bars coverage of risks against

  • the confinement, apprehension, arrest, restraint or detainment, and the end results of the actions or of any effort thereat;
  • the end results of hostilities or aggressive operations, whether there be a pronouncement of war or not;
  • the collision with a quarry or torpedo; and
  • the end results of civil war, revolution, rebellion

Exchange rates

The exchange rates in operation are also important in the performance of business operations. In finance, the exchange rates also described as the foreign-exchange rate, forex rate or FX rate specify the worth of one currency in comparison to the other. It is the value of a foreign country’s currency in comparison to the home country’s currency. For instance, an exchange rate of 91  Japanese yen (JPY, ¥) compared United States dollar (USD, $) implies that JPY 91 is worth the same as USD 1. An important term in exchange rate is spot exchange rate describes the current exchange rate. The forward exchange rate describes an exchange rate that is citation and traded at that particular day but for delivery and costs on a specific future date (Howard & Peter 40).

Political risks

These are also considered in the execution of business process. Political risk is the risk of loss when carrying out a business venture in a given nation resulting from the changes in a nation’s political structure or policies like tax laws, tariffs, and expropriation of assets or limitation in repatriation of profits. For instance an organization may experience a loss like the expropriation or stiffened foreign exchange repartition regulations or from enhanced credit risk if the authorities alter the policies to make it hard for the firm to pay creditors.

Managing Political Risk

It is necessary to manage political risk in order to succeed in execution of business processes. Unlike economic or financial variables, political risk is much hard to quantify. While it is likely to calculate political risk matters or other quantitative-like benchmarks, it is significant to keep in mind that these are eventually based on qualitative conclusions.

Market entry

Market entry is significant for every organization wishing to expand its operations and increase its market share. It is also important for new organizations or for organization venturing into new products. Market entry is the process in which firms venture into new markets. A market entry strategy is the designed procedure of delivering commodities or services to a target market and distributing the products in that place. When importing or exporting services it describes the describes the creation and managing contracts in a foreign nation(Howard & Peter 40).

Developing  a market entry strategy

Many firms successfully carry out their activities in a niche market without venturing into new markets.  Some business enterprises can increase their sales volumes, broad awareness and business firmness by venturing into new markets. Establishment of a market entry strategy entails a thorough evaluation of the potential competitors and the probable customers. Some of the factors that are considered in deciding a viable market niche include:

Barriers: deciding on a ne market strategy, one needs to find out whether there are any legal barriers that need to be addressed before making an entry. The legal documents such as licenses for instance to enter an international market need to be taken into account. Other issues to consider in this case are trade limitations like high tariffs levels and quotas (Howard & Peter 45).

Resources: these also need to be taken into account in order to make a successful market entry. A firm needs to consider the cost of the resources required to initiate the new entry strategy. It needs to consider whether the cost of resources will be recovered from the expected revenues.

Competition: competition is also significant in the planning of an market entry strategy. Whether the competition is stiff or aggressive will guide the organizations plan. The plan also needs to consider whether the suppliers in the market are domestic or international. This will assist the organization in positioning itself appropriately in the new market.

Public policy: the government policies in effect in that country need to be considered in the formulation of a market entry procedure. Factors such as subsidies and taxes greatly affect the operations of the market in every industry.

International markets: There are numerous means of international market entry. These include:

  • Exporting (directly or indirectly)
  • Licensing
  • Joint venture
  • Offshore production

Supply chain management

Supply chain management (SCM) is the control of a network of interconnected businesses involved in the final provision of commodities and services packages needed by the end users. Supply chain management extends to movement and storage of raw materials, W.I.P inventory and completed commodities from the point of manufacture to the place of consumption. It can also be defined as the design, planning, execution, control and monitoring of all the activities in the supply chain. The main objective of the activities in the supply chain management is to enhance the value of the products by increasing their utilities. The process is also intended to establish a competitive infrastructure, leveraging international logistics, harmonizing supply with demand and assessing performance all over the world (Howard & Peter 45).

Coordination of business activities between companies

Companies have to coordinate their business processes at various levels in order to achieve the set objectives. The level and the manner in which business transactions are coordinated determine the extent to which a business meets its objectives. Coordination of business activities and processes mainly involves exchange of information among related companies. One of the documents that control the coordination of business activities between business entities is the bill of landing.

Bill of landing

A bill of landing frequently referred to as BOLor B/L is a document provided by a carrier to a shipper, accepting that quantified goods have been received on board as cargo for conveyance to a particular place for delivery to a name consignee.  The term basically refers to loading a specified quantity of cargo onto a ship or any other mode of transportation although it normally describes at least two modes of transport.

A bill of lading is also used traded entity. The typical short form bill of lading is confirmation of the contract of loading of goods and it also serves several other purposes.

  • It is proof that a valid contract of loading, or a leasing contract, exists, and it may include the full terms of the contract existing between the consignor and the carrier by quoting that is the short form basically describes  the major contract as an obtainable document, while the long form of a bill of lading, that is the connaissement integral, provided by the carrier describes all the provisions of the contract of carriage
  • It is a proof of payment signed by the carrier validating whether goods corresponding the contract depiction have been received in the expected condition. A bill will be termed as clean if the commodities have been received on board in the appropriate condition and kept ready for transport (Paul 30).
  • It is also a paper of transfer, that is, is  freely transferable although not as a negotiable instrument in the legal perspective, i.e. it oversees all the legal issues of physical carriage and just like a check  which is a negotiable instrument, it may be approved altering the ownership of the commodities that are being transported (Paul 30).

Some of the terms that are encountered in the bill of leaning include:


A person who prepares commodities for shipment by packing, labeling and organizing for transportation or by controlling the transportation process.

Consignee and notify party

This is a typical expression that describes the manner in which a bill of lading is to be provided. Since a bill of lading is a document that confirms the ownership goods, consignee and notify party basically clarify the name of the Consignee. A very important instruction in the bill of lading is that it should state the person that needs to be notified and the manner in which such a person is to be notified. It should also provide for a means of indicating when the goods will reach the intended destination (Paul 30).

Place of receipt if different from the Port of Load

Under UCP 500 art 23(ii) , if a bill of lading outlines the point of receipt that varies from the port loading an on board notation is necessary to state the port of loading and name the vessel. For instance a place of receipt: Shenzhen, port of loading Taiwan.

Port of discharge

Port where ship is off loaded and cargo discharged

Commercial invoice

Commercial invoice illustrates the goods sold, unit cost and the quantity. It is normally written in U.S dollars but can also be written in other currencies. Another important thing that worth noting in the commercial invoice is the packing list. The packing list has the list of all the items that are being transacted. One should ensure that discrepancy do not exist between the invoice and the packing list. Any error should be identified and corrected at once (Slack et al 45).


Incoterms or in other words referred to as international commerce terms are a chain of international commerce terms that are frequently applied in international commercial transactions and published by the International Chamber of Commerce. The legal authorities, governments along with practitioners in the entire world use these terms for the purpose of interpretations of terms that are frequently used in international trade. This minimizes or even removes the uncertainties resulting from the various interpretations of these specific terms in various countries.  There is limited scope in this area in issues concerning the obligations and right of the parties to the sale contract with respect to the issuing of goods sold (Hall 65). They are basically applied in dividing responsibilities as well as transaction costs between the seller and buyer and replicate the practices relating to state-of-the-art transportations. They nearly relates with the United Nations Conventions on Contracts for the International Sale of Goods. The introduction of the first version was made in 1936 and the one used today is for 2000.    

Group E – Departure

EXW – Ex Works (named place)

The seller ensures that the goods are made available at his/her premises while the buyer is accountable for every charge. The above term of trade hence gives the buyer a higher responsibility while on the other hand the buyer assumes minimum obligations. The Ex Works term is frequently used when dealing with an initial quotation concerning the sale of goods in absence of costs. This is an example of an international commercial terms or an Incoterm and are widely used globally. EXW implies that on the date that has been agreed by the seller and the buyer, the seller has with him goods that are ready for collection from the premises, for instance factory, plant or warehouse. It is the obligation of the buyer to cater for transport and also takes the risks involved in taking the goods to the final destination. With reference to this term, the buyer is needed to perform export formalities in the supply country which is a task that seems impossible nowadays. It therefore means that in many incidences where the terms are cited EXW, the seller is actually intended to execute export formalities which indicate then that the right term to is FCA which means Seller’s premises (Hall 59).      

Group F – Main carriage unpaid

FCA – Free Carrier (named places)

The seller has the responsibilities of handing over the goods that are cleared for exports at a named place and to the custody of the initial carrier who is specifically named by the buyer. This term is fit for all means of transport such as air, road, rail and multi-modal or containerized transport.

FAS – Free Alongside Ship (named loading port)

In this term, the seller has the responsibility of taking the goods at a particular port alongside the ship. In addition the seller ought to make the goods clear for transport and this is according to the 2000 version of the international commerce terms (Hall 65). 


All the activities and tasks involved in the completion of business process are significance towards the success of the activities. The main processes involved entail the management of risk, collection of insurance and establishment of the appropriate documentation in order to complete safe shipment procedures of goods and services. Management of the various risks involved in business ventures is also significant towards succeeding in business operations. All business process have to take into account the risk involved in order to manage the risk and complete the processes successfully. Organizations coordinate their business activities at various levels in order to complete business transactions. This coordination is facilitated by various business documents which include, a bill of lading, commercial invoices and packing list. The various risks in business transactions are managed through insurance policies (Obeng 25).

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