Business Information System (Chapter 4)

BIS Chapter 4

1.       Explain briefly how the value chain represents (displays) a business. Hint: what does the business do to the "raw materials" that it begins with? How is this displayed in the value chain?

The value chain views a business as a series of processes, each of which adds value to the product or service for each customer.  There are primary activities (which transform the inputs to the products or services) and the secondary activities that support the primary activities.

2.       Briefly explain what each component (rectangle) named in the value chain below represents.

·         Review and store raw materials - the business processes for receiving and storing raw materials that come into the business.

·         Make the product or service - the business processes (manufacturing or otherwise) that make the product or service.

·         Deliver the product or service - the business processes for delivering the product or service.

·         Market and sell the product or service - the business process for marketing and selling the product or service.

·         Service after the sale - the business processes for service after the sale.  

·         Business infrastructure (including TI) - the business processes for the infrastructure within the business (e.g supportive services) and business processes for ICT infrastructure.  

·         Human resource management - the business processes for managing the human resource within the business (e.g. recruitment, development, rewards).

·         Research and development - the business processes for research and development within the business (i.e. researching new products or services and bringing them to market).

·         Procurement - the business processes for procuring (i.e. finding and obtaining) all things the business requires to function (e.g. from raw material to ICT infrastructure and buildings).  

3.       When analysing competitive forces businesses determine where in the value chain they should create business value (to fight the competitive forces).  Match the competitive forces below with the indicated improvements to the value chain (that also indicate why these improvements will help fight the competitive forces).

Buyer or Customer Power			Increase the value on the demand side of value chain (to increase the switching costs).
Threat of New Entrants			Increase value of support activities (to increase barrier to entry).
Threat of Substitute Products			Increase value of primary activities (and Research and Development) to produce a better overall product.
Threat of Supplier Power			Increase the value of supply side of value chain (to give business more procurement options)
Rivalry Amongst Existing Competitors			Increase the value across the value chain to improve the overall business.