11.1 Value-Chain Analysis Flashcards
The flow of materials and services from their original sources to final consumers is the
A. Value process
B. Supply chain
C. Product chain
D. Value chain
B. Supply chain
The supply chain usually encompasses more than one firm. Firms seeking to improve performance and reduce costs must analyze all phases of the supply chain as well as the value chain.
Which one of the following is a support activity on the value chain?
A. Human resources.
B. Research and development (R&D).
C. Marketing and distribution.
D. Customer service.
A. Human resources.
The primary activities on the value chain are (1) R&D, (2) product design, (3) manufacturing, (4) marketing and distribution, and (5) customer service. Support activities include (1) human resources, (2) information technology, (3) contract management, (4) inventory management, and (5) plant maintenance.
Which of the following is not a phase in a value-chain analysis?
A. Identify means for improving product cost efficiency
B. Identify ways to generate additional customer value
C. Identify activities that are candidates for cost reduction
D. Identify the firm’s competitive advantage
A. Identify means for improving product cost efficiency
The second step in a value-chain analysis is to determine how each value-creating activity can produce a competitive advantage for the firm. This step has multiple substeps:
1. Identify the firm’s competitive advantage (e.g., cost reduction, product differentiation) so that the firm’s position in the industry’s value chain can be clarified.
2. Identify the ways in which the firm’s value-creating activities can generate additional customer value.
3. Identify activities that are candidates for cost reduction or, in the case of non-core competencies, outsourcing.
4. Identify value-adding ways in which the firm’s remaining activities can be linked.
A systematic approach to reaching targeted cost levels during value chain analysis is known as
A. Value engineering
B. Life-cycle costing
C. Process value analysis
D. Activity analysis
A. Value engineering.
Value engineering is a means of reaching targeted cost levels. IT is a systematic approach to assessing all aspects of the value chain cost buildup for a product.
An entity develops computer programs to meet customers’ special requirements. How should the entity categorize payments to employees who develop these programs?
Direct cost: yes/no
Value-Adding costs: yes/no
Direct cost: yes
Value-Adding costs: yes
Direct costs may be defined as those that can be specifically associated with a single cost object and can be assigned to it in an economically feasible manner. Wages paid to labor that can be identified with a specific finished good are direct costs. Value-adding costs may be defined as the costs of activities that cannot be eliminated without reducing the quality, responsiveness, or quantity of the output required by a customer or by an organization. Clearly, the amounts paid to programmers add value to computer programs.
Which of the following is not a component of the value chain?
A. Primary activities
B. Secondary activities
C. Support activities
D. The product
B. Secondary activities
The value chain is a model for depicting the way in which every function in a company adds value to the final product. Primary activities deal with the product directly. Support activities lend aid to the primary activity functions.
Which one of the following lists of functions is in proper value-chain order?
A. Research and development, marketing, and customer services
B. Production, marketing, and product design
C. Production design, distribution, and marketing
D. Research and development, customer service, and distribution.
A. Research and development, marketing, and customer services
These functions are in the proper order while in the other options the functions are out of order. Costs and customer value are added along the value-chain to provide an end product or service.
Which one of the following is a value-added activity for a company that manufactures bicycles?
A. Moving a tire to the rework area.
B. Placing a reworked brake on a bicycle.
C. Reworking a bicycle for the second time.
D. Inspecting a reworked bicycle.
B. Placing a reworked brake on a bicycle.
A value-added activity contributes to customer satisfaction or meets a need of the entity. A nonvalue-added activity does not make such a contribution. It can be eliminated, reduced, or redesigned without impairing the quantity, quality, or responsiveness of the product or service desired by customers or the entity. It is necessary to place a brake on a bicycle, whether the brake is reworked or new. The addition of the brake is required before the bicycle can be sold, which contributes to the customer’s satisfaction.
