The Value Chain Concept , developed by Michael Porter, is useful for helping you to decide when and how to apply the strategic capabilities of IT. The Concept views a firm as a series, or chain, of basic activities that add value to a firm’s products and services, and thus add a margin of value to the firm. In this way some activities are seen as primary processes, while others are seen as support processes that provide direction and support for the specialized work of primary activities. Thus, the framework highlights where competitive strategies can best be applied in a business. For each activity, the role of strategic information systems (SIS) can contribute significantly to that activity’s contribution to the value chain. For example: Administrative Coordination & Support Services . The key role of SIS here is in enterprise communication and collaboration. Human Resources Management. SIS role: Career development Intranet for employees. Technology Development. SIS role: Computer-Aided Design Extranets with partners. Procurement of Resources. SIS role: E-Commerce Extranet with suppliers. Primary Activities . These activities directly contribute to the transformation process of the organization. Inbound Logistics. SIS role: Automated Warehousing, JIT. Operations. SIS role: Computer-Aided Manufacturing. Outbound Logistics. SIS role: Online Data Entry. Marketing and Sales. SIS role: Interactive Targeted Marketing. Customer Service. SIS role: Customer Relationship Management. Teaching Tips This slide corresponds to Figure 2.9 on p. 61 and relates to the material on p. 59.
Information Systems for Strategic Advantage BUS 782
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It views a firm as a series, or chain, or network of basic activities that add value to its products and services, and thus add a margin of value to the firm.
Margin is the value of the firm’s products and services less their costs, as perceived by the firm’s customers.
Administration, human resource management ,etc.
Inbound logistics, operations, outbound logistics, marketing, etc.
The Value Chain Administrative Coordination & Support Services Human Resource Management Technology Development Procurement of Resources Inbound Logistics Operations Outbound Logistics Marketing and Sales Customer Service Competitive Advantage
Agility in competitive performance is the ability of a business to prosper in rapidly changing, continually fragmenting global markets for high-quality, high-performance, customer-configured products and services. An agile company can:
1. Make a profit in markets with broad product ranges and short model lifetimes
2. Process orders in arbitrary lot sizes
3. Offer individualized products while maintaining high volumes of production.