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Unfair business practices encompass fraud, misrepresentation, and oppressive
or unconscionable acts or practices by business, often against consumers and are
prohibited by law in many countries. For instance, in the European Union, each
member state must regulate unfair business practices in accordance with the
Unfair Commercial Practices Directive, subject to transitional periods. Unfair
business practices may arise in many areas, including:
tenancy matters
matters involving the purchase of products and services by consumers
matters involving insurance claims and the settlement thereof
debt collection in cases of default
In addition to providing for the award of compensatory damages, laws may also
provide for the award of punitive damages as well as the payment of the
plaintiff's legal fees.
At common law, individuals were not entitled to attorneys fees or punitive
damages for wrongful acts committed by businesses in most states. Most often,
laws prohibiting unfair business practices require consumers to send demand
letter to the business prior to commencing with a law suit. If the business
fails to make a reasonable offer of settlement within a specified period of
time, and is subsequently found liable in court, it may be liable for punitive
damages and the injured parties reasonable attorney's fees under many statutes.
In some instances, the statutes provide for prevailing plaintiffs to recover
double or triple the actual damages against non-settling defendants.
When statutes prohibiting unfair and deceptive business practices provide for
the award of punitive damages and attorneys fees to injured parties, they
provide a powerful incentive for businesses to resolve the claim through the
settlement process rather than risk a more costly judgment in court.
Definition
“The grouping of business functions and related business objects into clusters
(“business domains”) over which meaningful accountability can be taken as
depicted in the high level description of the related business processes”.
“Business Architecture” is an architecture that structures the accountability
over business activities prior to any further effort to structure individual
aspects (processes, data, functions, organization, systems, applications, etc.).
A Business Architecture arranges the accountabilities around the most important
business activities (for instance production, distribution, marketing, etc.)
and/or the economic activities (for instance manufacturing, assembly, transport,
wholesale, etc.) into domains.
Main elements of the Business Architecture are “business domains”. They can best
be looked at as “areas of accountability”. Within the business architecture a
high level description is provided of how the business processes are dealt with
by these domains and which domain is responsible for specified business
functions or objects. Thus: the main elements of a business architecture are
“business domains”, which are clusters of coherent business functions and
objects (concepts), over which meaningful responsibility can be taken in
business processes. Note that these domains are consciously decoupled from the
organizational graph itself and therefore decoupled from current managerial
position and interests. Assigning the business domains to specific directors and
business units is a subsequent activity (after the creation and acceptance of
the business architecture, that is). A Business Architecture contains: 1) the
lay-out of business domains (including their occurrences on various levels) and
their assigned business activities and added value (“business case”). 2) The
business functions and business concepts (high-level data descriptions) that
these business domains need (and are responsible for) to perform their assigned
business activity. 3) The high level business processes, which shows how these
domains work together (interface) to achieve the organizational goals and
strategies. Such a business architecture shows higher level management how their
strategy will be implemented in their corporation.
Approaches that are focusing on the more or less formal organizational structure
as such are, compared to “Business Architecture”, more limited in scope. They
generally do not describe items like: business processes, interfacing between
organizational domains and business objects. They are therefore of limited use
in understanding the consequences of projected strategic change. More often
organizational diagrams are a derivative of a target Business Architecture,
where the pre-determined areas of accountability (business domains) are
subsequently linked to actual departments and managerial key-players.
Position of the concept “Business Architecture” towards the TOGAF framework
The TOGAF-framework is a useful starting point to get a grip on how to position
“Business Architecture” amongst the plethora of other types of “Architectures”.
The TOGAF does not classify the distinct dimensions into pre-defined types, like
the framework of Zachman (1987) does. According to TOGAF (The Open Group
Architecture Framework, 2003) four dimensions are relevant in determining the
position of an architecture:
- Domain: the architecture domains (aspects, viewpoints) such as: business,
data, application and technology;
- Scope: the enterprise scope: what part of the organization (department,
business unit, firm) or even across traditional boundaries (virtual enterprise);
- Granularity: the level of detail or level of granularity;
- Time: the time horizon: the factual situation, the desired or target
architecture or any intermediate situations.
Although the Open group adheres to the IEEE-definition (IEEE 1471, 2000) of
“Architecture” (“the fundamental organization of a system, embodied in its
components, their relationships to each other and the environment, and the
principles governing its design and evolution”), they limit the use of this term
to the development of Information Systems: “An architecture framework is a tool
which can be used for developing a broad range of different architectures. It
should describe a method for designing an information system in terms of a set
of building blocks, and for showing how the building blocks fit together”. The
Open Group as so many others do, limit the concept of “System” to “Information
system” and in doing so limit “Architecture” to the realm of Information
Systems. This common myopia might well be one of the reasons why the business
oriented disciplines, like Business Administration and Organizational Design,
fright away from using “Architectures” in their practice, depicting it as an IT
pass time. Unfortunate; because they also miss the advantages of using
Architecture to gain understanding in the ever increasing complexity of current,
often networked organizations.
Although the Open Group limits their framework to be used to develop Information
Systems only, their framework includes a “Business Architecture”. This is
described as: “a business (or business process) architecture - this defines the
business strategy, governance, organization, and key business processes”. It is
distinguished next to Application Architecture, Data Architecture en Technology
Architecture. This classification refers to the domain-dimension of the TOGAF.
Architectures for the business domain are less common than architectures of any
of the other domains. Business Architectures give structure to aspects that are
in the business domain instead of the IT-domain. As stated earlier, architecture
(aside from physical building architecture) has always mainly been an
IT-prerogative. The concept of architecture is scarcely used in the realm of
organizational theorists. An exception can be made for process architectures
that are getting more and more attention. However in common practice, these
process architectures are still initiated mainly by the IT-discipline based on
the need for the enhanced specification of requirements and to better tune
IT-architectures to their use in business processes. The other three dimensions
of the TOGAF are all considered to be relevant to the concept “Business
Architecture”.
Looking at “scope”, Business Architectures can be used for supply chains,
networked organizations, individual enterprises, business units, departments,
etc. One of the recently more trendy scopes is the Enterprise Architecture. As
with all architectures, these enterprise scoped architectures are mainly
IT-oriented. They usually focus on Enterprise Application Integration issues,
addressing the diversified state of IT-solutions in many, often merged
organizations. One could refer to a Business Architecture with an
enterprise-wide scope as a “Enterprise Business Architecture” as opposed to for
instance an Enterprise Information Architecture.
Regarding the dimension “level of detail”, Business Architectures can appear in
various levels of detail. The level of detail is mainly tied to the scope of the
architecture, the smaller the scope the more detailed the Business Architecture
usually is. An Enterprise Business Architecture generally contains less detail
than a Business Architecture of one its departments. A set of business
architectures for a certain organization, can contain a top-level Business
Architecture completed with more detailed sub Business Architectures for its
Business Units and so forth. In today’s practice however, Business Architectures
are usually very high level structures with little detail.
The “time”-dimension, is also recognized in Business Architecture, where “as-is”
Business Architectures represent the current state of affairs and “to-be”
architectures represent a targeted state of affairs for a time frame of three to
five years (or at least consistent with the time frame of the underlying
formulated business strategy). Usually Business Architectures are used to
describe and clarify necessary changes to the current business, mainly to be
able to understand where to go. Architectures of the current state are usually
drawn to better understand the scope of projected changes or to be to analyze
the gap between the targeted situation and the current status-quo. Based on this
gap it is common practice to setup a migration approach to be able to reach the
targeted situation. Gap analysis and subsequent migration scenarios are used in
all of the types of architectures.
In short, measured by the TOGAF-dimensions, Business Architecture focuses on a
specific domain (business), while keeping the full breadth of the other
dimensions (scope, time and level of detail).
Business Strategy
Business Architecture is directly based on business strategy. It is the
foundation for subsequent architectures (strategy embedding), where it is
detailed into various aspects and disciplines. The business strategy can consist
of elements like strategy statements, organizational goals and objectives,
generic and/or applied business models, etc. The strategic statements are
analyzed and arranged hierarchically, through techniques like qualitative
hierarchical cluster analysis. Based on this hierarchy the initial business
architecture is further developed, using general organizational structuring
methods and business administration theory, like theories on assets and
resources and theories on structuring economic activity. Based on the business
architecture the construction of the organization takes shape (figure 1:
strategy embedding). During the strategy formulation phase and as a result of
the design of the business architecture, the business strategy gets better
formulated and understood as well as made more internally consistent.
The business architecture forms a significantly better basis for subsequent
architectures than the separate statements themselves. The business architecture
gives direction to organizational aspects, such as the organizational
structuring (in which the responsibilities of the business domains are assigned
to individuals/business units in the organization chart or where a new
organization chart is drawn) and the administrative organization (describing for
instance the financial reconciliation mechanisms between business domains).
Assigning the various business domains to their owners (managers) also helps the
further development of other architectures, because now the managers of these
domains can be involved with a specific assigned responsibility. This led to
increased involvement of top-level management, being domain-owners and well
aware of their role. Detailed portions of business domains can be developed
based on the effort and support of the domain-owners involved. Business
architecture therefore is a very helpful pre-structuring device for the
development, acceptance and implementation of subsequent architectures.
The perspectives for subsequent design next to organization are more common:
information architecture, technical architecture, process architecture. The
various parts (functions, concepts and processes) of the business architecture
act as a compulsory starting point for the different subsequent architectures.
It pre-structures other architectures. Business architecture models shed light
on the scantly elaborated relationships between business strategy and business
design. We will illustrate the value of business architecture in a case study
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