Business Value Chain and Industry Best Practices

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Questions and Answers

What is the primary focus of primary activities in the business value chain model?

Optimizing administrative tasks

Creating value for the customer (correct)

Improving operational efficiency

Enhancing customer and supplier intimacy

What is the purpose of benchmarking in the business value chain model?

To reduce operational costs

To increase market share

To improve customer service

To compare business processes against industry standards (correct)

What is the main objective of identifying industry best practices?

To improve employee morale

To increase the number of customers

To achieve a competitive advantage and attain operational excellence (correct)

To reduce the number of suppliers

What is the result of making improvements in the business value chain that competitors might miss?

Achieving competitive advantage Signup and view all the answers

At which stage of the value chain should information systems be utilized to improve operational efficiency?

At each stage of the value chain Signup and view all the answers

What is the primary role of software in automakers' products?

To add value to the products Signup and view all the answers

What is the main goal of inbound logistics in the business value chain model?

To receive and store materials for distribution to production Signup and view all the answers

What is the purpose of the service activity in the business value chain model?

To maintain and repair products Signup and view all the answers

What is the value web, as described in the text?

A networked system for synchronizing value chains Signup and view all the answers

What is the benefit of improving the business value chain, even if competitors are making similar improvements?

Avoiding a competitive disadvantage Signup and view all the answers

What is the primary focus of support activities in the business value chain model?

Making the delivery of primary activities possible Signup and view all the answers

What is the main goal of procurement in the business value chain model?

To purchase input materials Signup and view all the answers

What is the relationship between the value chain and information systems?

Information systems are used to analyze the value chain Signup and view all the answers

What is the outcome of synchronizing the value chains of business partners within an industry?

Responding rapidly to changes in supply and demand Signup and view all the answers

What is the role of human resources in the business value chain model?

Employee recruiting, hiring, and training Signup and view all the answers

What is the primary goal of using information systems in the business value chain?

To improve operational efficiency Signup and view all the answers

What is the primary benefit of synergies in business units?

To improve overall performance by leveraging shared resources Signup and view all the answers

What is an example of a core competency?

Procter & Gamble's intranet and directory of subject matter experts Signup and view all the answers

What is the primary difference between traditional economics and network economics?

The law of diminishing returns versus the concept of marginal gain Signup and view all the answers

What is a characteristic of a virtual company strategy?

It uses networks to ally with other companies to create and distribute products Signup and view all the answers

What is an example of a business ecosystem?

Microsoft's platform used by thousands of firms Signup and view all the answers

What is the role of a keystone firm in a business ecosystem?

To dominate the ecosystem and create a platform used by other firms Signup and view all the answers

What is the primary goal of a company's information systems in operations?

To improve overall performance by leveraging shared resources Signup and view all the answers

What is the primary benefit of a network-based strategy?

To take advantage of a firm's abilities to network with each other Signup and view all the answers

Study Notes

Industry Best Practices

Identified by consulting companies, research organizations, government agencies, and industry associations as the most successful solutions or problem-solving methods for consistently and effectively achieving a business objective.

Business Value Chain Model

Primary activities:
- Inbound logistics (receiving and storing materials)
- Operations (transforms inputs into finished products)
- Outbound logistics (storing and distributing finished products)
- Sales and marketing (promoting and selling products)
- Service (maintenance and repair of goods and services)
Support activities:
- Organization infrastructure (administration and management)
- Human resources (employee recruiting, hiring, and training)
- Technology (improving products and the production process)
- Procurement (purchasing input)

Improving Operational Efficiency

Ask at each stage of the value chain, "How can we use information systems to improve operational efficiency and improve customer and supplier intimacy?"
Benchmarking: comparing business processes against competitors or others in related industries and identifying industry best practices.

Synergies and Core Competencies

Synergies: when output of some units used as inputs to others, or organizations pool markets and expertise
Core competencies: activity for which a firm is a world-class leader, relying on knowledge, experience, and sharing across business units.

Network-Based Strategies

Take advantage of a firm's abilities to network with each other
Include use of:
- Network economics
- Virtual company model
- Business ecosystems

Traditional Economics vs Network Economics

Traditional economics: law of diminishing returns
Network economics:
- Marginal cost of adding new participant almost zero, with much greater marginal gain
- Value of community grows with size
- Value of software grows as installed customer base grows

Virtual Company Strategy

Virtual company uses networks to ally with other companies to create and distribute products without being limited by traditional organizational boundaries or physical locations
Example: Li & Fung manages production, shipment of garments for major fashion companies, outsourcing all work to more than 7,500 suppliers

Business Ecosystems

Industry sets of firms providing related services and products
Keystone firms: dominate ecosystem and create platform used by other firms
Niche firms: rely on platform developed by keystone firm
Individual firms can consider how IT will help them become profitable niche players in larger ecosystems.

The Digital Firm Era

Requires a more dynamic view of the boundaries among industries, firms, customers, and suppliers, with competition occurring among industry sets in a business ecosystem.

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Description

This quiz assesses understanding of industry best practices and the business value chain model, identifying successful solutions and methods to achieve business objectives.