Chapter 2

Question 1

What is a “Value Chain” according to Michael Porter?

Answer 1

A concept that describes a company as a set of building blocks, each essential for creating value and gaining a competitive advantage.

Question 2

What are “Primary Business Activities” in the value chain?

Answer 2

They are the main functions directly involved in producing and delivering goods/services, including inbound logistics, operations, outbound logistics, marketing and sales, and service.

Question 3

What is the role of “Inbound Logistics” in a company?

Answer 3

It involves sourcing raw materials, storing, and managing inputs needed for production.

Question 4

Define “Operations” in the context of a value chain

Answer 4

The function that converts inputs into finished products or services.

Question 5

What does “Outbound Logistics” encompass?

Answer 5

Storage, shipment, and delivery of goods to customers, adding value to the business.

Question 6

How do “Marketing and Sales” contribute to a company’s value?

Answer 6

They create awareness and promote products through advertisements, promotions, and customer outreach.

Question 7

What is the purpose of the “Service” function?

Answer 7

Ensures quality after-sales support, handling returns, repairs, and customer inquiries.

Question 8

What are “Support Business Activities” in the value chain?

Answer 8

Activities that support primary functions, including procurement, HR management, technology, and company infrastructure.

Question 9

What does “Procurement” involve in the support activities?

Answer 9

Purchasing raw materials and supplies essential for company operations.

Question 10

What is “Human Resource Management” (HRM) in a company?

Answer 10

Managing workforce activities like hiring, training, compensation, and staff termination.

Question 11

Describe the “Technology” support function.

Answer 11

Provides necessary computer hardware, software, and technical expertise for company operations and customer connectivity.

Question 12

What does “Company Infrastructure” refer to?

Answer 12

It includes management tasks like financing, long-term planning, legal issues, and managing external relationships.

Question 13

What is the impact of digitalization on the value chain?

Answer 13

Digitalization transforms various company activities, enhancing functions like logistics, operations, and customer service through digital tools.

Question 14

How did the Share Now app demonstrate digitalization in the value chain?

Answer 14

It allowed customers to book, return cars, and make payments via smartphones, showing digital transformation in car rentals.

Question 15

What is McPhee and Wheeler’s proposed value-added chain model?

Answer 15

It includes a wider range of business activities and redefines value to include brand, reputation, and relationship-based value drivers.

Question 16

What does “value-added chain” mean?

Answer 16

Ensuring that customers receive extra benefits in exchange for payments by analyzing and removing inefficiencies across the value chain.

Question 17

How does Apple add value at each stage of its value chain?

Answer 17

By managing high-quality inbound logistics, low-cost operations, an omnichannel approach for sales, strong marketing, and high-quality after-sales service.

Question 18

What is Apple’s approach to inbound logistics?

Answer 18

Apple has a global network of suppliers to ensure top-quality logistics.

Question 19

Define “Omnichannel Strategy.”

Answer 19

Selling products online and in physical stores to maintain high profit margins.

Question 20

How does Apple’s investment in technology add value?

Answer 20

By using advanced technology, Apple differentiates itself and strengthens its brand.

Question 21

What is “Lean Management”?

Answer 21

A systematic approach to enhance operational efficiency by eliminating non-value-added activities and increasing profitability.

Question 22

List Toyota’s five principles of lean management.

Answer 22

Product value, value stream, flow of products, pull/demand production, and excellence.

Question 23

What does the “value stream” principle involve?

Answer 23

Mapping activities in the supply chain, production, marketing, etc., to identify where value is added.

Question 24

Describe the “flow of products” principle.

Answer 24

It emphasizes eliminating waste and delays, ensuring an uninterrupted production process.

Question 25

What is the “pull/demand production” concept?

Answer 25

Producing only when there is customer demand to avoid over-investment in inventory.

Question 26

How does the principle of “excellence” contribute to value?

Answer 26

By continuously improving every stage of production and service delivery to enhance customer satisfaction.

Question 27

What are the four main factors impacting value chains in the 21st century?

Answer 27

Inclusiveness of national markets, intensive technology use, shorter product life cycles, and changing customer behaviors.

Question 28

Define “dominant logic” as introduced by Prahalad and Bettis (1986)

Answer 28

A set of heuristic rules and tools that managers use for strategic decision-making, based on industry experience and business knowledge.

Question 29

What role does “dominant logic” play for managers?

Answer 29

It guides managers in making business decisions using cognitive maps and patterns as reference points.

Question 30

How does “dominant logic” evolve, according to the three elements mentioned?

Answer 30

Through top management mindset, core business features, and core business activities.

Question 31

What is Christensen’s “Innovator Dilemma”?

Answer 31

A challenge where dominant logic hinders innovation, especially when companies fail to adapt to disruptive technologies.

Question 32

Provide an example of a company affected by the “Innovator Dilemma”.

Answer 32

Sears Roebuck, which failed to adapt to discount retailing and online shopping, allowing competitors to gain market share.

Question 33

How did IBM’s adherence to dominant logic affect its position in the computer industry?

Answer 33

IBM failed to adapt to the demand for personal desktop computers, allowing competitors like Apple to take market share.

Question 34

Why do large companies often struggle with innovation?

Answer 34

They focus on core products and profitability targets, lack entrepreneurial spirit, and may overlook niche markets.

Question 35

What are “disruptive technologies”?

Answer 35

Technologies offering unique value through user-friendly, affordable, and simplified products.

Question 36

How is digitalization linked to disruptive technologies?

Answer 36

Digitalization drives disruptive technologies and introduces digital business models, challenging traditional companies.

Question 37

What is a “value-stream map”?

Answer 37

A tool that shows all stages a product or service goes through before reaching the customer.