24 Questions
What is the primary focus of primary activities in the business value chain model?
Creating value for the customer
What is the purpose of benchmarking in the business value chain model?
To compare business processes against industry standards
What is the main objective of identifying industry best practices?
To achieve a competitive advantage and attain operational excellence
What is the result of making improvements in the business value chain that competitors might miss?
Achieving competitive advantage
At which stage of the value chain should information systems be utilized to improve operational efficiency?
At each stage of the value chain
What is the primary role of software in automakers' products?
To add value to the products
What is the main goal of inbound logistics in the business value chain model?
To receive and store materials for distribution to production
What is the purpose of the service activity in the business value chain model?
To maintain and repair products
What is the value web, as described in the text?
A networked system for synchronizing value chains
What is the benefit of improving the business value chain, even if competitors are making similar improvements?
Avoiding a competitive disadvantage
What is the primary focus of support activities in the business value chain model?
Making the delivery of primary activities possible
What is the main goal of procurement in the business value chain model?
To purchase input materials
What is the relationship between the value chain and information systems?
Information systems are used to analyze the value chain
What is the outcome of synchronizing the value chains of business partners within an industry?
Responding rapidly to changes in supply and demand
What is the role of human resources in the business value chain model?
Employee recruiting, hiring, and training
What is the primary goal of using information systems in the business value chain?
To improve operational efficiency
What is the primary benefit of synergies in business units?
To improve overall performance by leveraging shared resources
What is an example of a core competency?
Procter & Gamble's intranet and directory of subject matter experts
What is the primary difference between traditional economics and network economics?
The law of diminishing returns versus the concept of marginal gain
What is a characteristic of a virtual company strategy?
It uses networks to ally with other companies to create and distribute products
What is an example of a business ecosystem?
Microsoft's platform used by thousands of firms
What is the role of a keystone firm in a business ecosystem?
To dominate the ecosystem and create a platform used by other firms
What is the primary goal of a company's information systems in operations?
To improve overall performance by leveraging shared resources
What is the primary benefit of a network-based strategy?
To take advantage of a firm's abilities to network with each other
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.
This quiz assesses understanding of industry best practices and the business value chain model, identifying successful solutions and methods to achieve business objectives.
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