Chapter 3 Flashcards
Value-chain analysis assumes that the basic economic purpose of a firm is to create value and it is a useful
framework for analyzing the strengths and weaknesses of the firm.
T. Value-chain analysis views the organization as a sequential process of value-creating activities. It
provides greater insights into analyzing the competitive position of a firm than SWOT analysis does by
itself.
In value-chain analysis, value is measured by the market value of the total stock outstanding of the
company.
F. Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total
revenue, a reflection of the price the product of the firm commands and the quantity it can sell.
When is a firm considered profitable?
A) When its total revenue is greater than its total costs.
B) When the value it receives exceeds the total cost of creating its product or service.
C) When its consumer surplus is maximized.
D) When its fixed costs are minimized.
B
What are primary activities according to Porter?
A) Activities that support the overall strategy of the firm.
B) Activities that directly contribute to the creation, sale, and support of a product or service.
C) Activities that focus on financial management.
D) Activities that involve human resource development.
B
What does inbound logistics refer to?
A) Managing the delivery of products to customers.
B) Transforming raw materials into finished goods.
C) Managing the receipt, storage, and distribution of inputs.
D) Promoting and selling products to customers.
C
Which of the following is a support activity in Porter’s framework?
A) Outbound logistics
B) Service
C) Technology development
D) Marketing and sales
C
What is the main focus of human resource management as a support activity?
A) Managing logistics and distribution.
B) Recruiting, training, and retaining talent.
C) Enhancing product features.
D) Developing marketing strategies.
B
Which activity is responsible for delivering products or services to customers?
A) Operations
B) Inbound logistics
C) Outbound logistics
D) Service
C
What role does general administration play in Porter’s framework?
A) It focuses on product design.
B) It manages overall firm operations and strategy.
C) It enhances customer relationships.
D) It oversees supply chain management.
B
In assessing its primary activities, an airline would examine
A. employee training programs.
B. baggage handling.
C. criteria for lease versus purchase decisions.
D. the effectiveness of its lobbying activities.
B
Inbound logistics include
A. machining and packaging.
B. repair and parts supply.
C. promotion and packaging.
D. warehousing and inventory control
D. Inbound logistics is associated primarily with receiving, storing, and distributing inputs to the product. It
includes material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers.
Advertising is a __________ activity. Supply of replacement parts is a __________ activity.
A. support;
primary
B. primary;
primary
C. primary;
support
D. support;
secondary
B
Which of the following examples demonstrates how successful organizations manage their primary
activities?
A. Motorola has revised its compensation system to reward employees who learn a variety of skills.
B. Wal-Mart implemented a sophisticated information system that resulted in reduced inventory
carrying costs and shortened customer response times.
C. National Steel improved its efficiency by reducing the number of job classifications.
D. Hewlett Packard has cut lead time from five days to one by employing JIT inventory management.
D
The value-chain concept assumes that both primary and support activities are capable of producing
value for customers.
T
Inbound logistics include all activities associated with transforming inputs into the final product form
such as machining, packaging, assembly, equipment, testing, printing, and facility operations.
F. Inbound logistics is primarily associated with receiving, storing, and distributing inputs to the product.
Operations include all activities associated with transforming inputs into the final product form, such as
machining, packaging, assembly, testing, printing, and facility operations.
Support activities provide support for primary activities, but not each other.
F. Support activities (procurement, technology development, human resource management, and general
administration) either add value by themselves or add value through important relationships with both
primary activities and other support activities.
Establishing a customer service hotline to handle customer complaints would be considered a primary
activity in value-chain analysis.
T. Service is a primary activity which includes all actions associated with providing service to enhance or
maintain the value of the product, such as installation, repair, training, parts supply, and product
adjustment.
In value-chain analysis, finance and accounting are considered part of the general administration of a
firm
T
What is an important reason for firms to analyze both internal and external value creation?
A) To maximize profits without considering customer needs.
B) To ensure that their internal processes align with the value expectations of suppliers, customers, and partners.
C) To focus only on product development and ignore market trends.
D) To simplify their operations by reducing external partnerships.
B
Which of the following is an example of value addition?
A) Reducing employee training programs
B) Enhancing collaboration with suppliers
C) Cutting costs across all departments
D) Minimizing communication with customers
B
Which of the following is not an advantage of Just-In-Time inventory systems?
A. reduced raw material storage costs
B. minimized idle production facilities and workers
C. reduced work-in-process inventories
D. reduced dependence on suppliers
D. With JIT inventory systems, parts deliveries arrive at the assembly plants only hours before they are
needed. This requires greater reliance on superior performance of suppliers.
XYZ Corp. is focusing on the objective of low-cost, high quality, on-time production by minimizing idle
productive facilities and workers. The XYZ Corp. is taking advantage of a __________ system.
A. Last In, First Out (LIFO)
B. Highly mechanized
C. First In, First Out (FIFO)
D. Just-In-Time (JIT)
D. Just-in-time (JIT) inventory systems were designed to achieve efficient inbound logistics, which is one of
the five primary activities in value-chain analysis. With JIT inventory systems, parts deliveries arrive at
the assembly plants only hours before they are needed, which reduces idle production capacity.
Inbound logistics include
A. machining and packaging.
B. repair and parts supply.
C. promotion and packaging.
D. warehousing and inventory control
D
Which of the following strategies is NOT mentioned as a method for managing inbound logistics effectively?
A) Implementing a Just-in-Time (JIT) inventory system
B) Locating assembly plants near suppliers
C) Developing long-term supplier contracts
D) Creating an efficient layout for raw materials
C
What do operations primarily encompass in an organization?
A) Marketing and sales activities
B) Transforming inputs into final products
C) Customer service interactions
D) Financial planning and analysis
B
Which of the following is NOT an example of an operation task?
A) Machining
B) Packaging
C) Market research
D) Testing
C
___________ is/are associated with collecting, storing, and distributing the product or service to buyers.
They consist of warehousing, material handling, delivery operation, order processing, and scheduling.
A. Services
B. Inbound logistics
C. Outbound logistics
D. Operations
C
How can implementing environmentally friendly manufacturing practices benefit an organization?
A) By increasing raw material costs
B) By creating a competitive advantage
C) By reducing product quality
D) By limiting production capacity
B
Campbell Soup uses an electronic network to facilitate its continuous-replenishment program with its
most progressive retailers. This is known as an operations primary activity in the value chain.
F. Outbound logistics is associated with collecting, storing, and distributing the product or service to
buyers. These activities include finished goods, warehousing, material handling, delivery vehicle
operation, order processing, and scheduling. Campbell Soup uses an electronic network to facilitate its
continuous-replenishment program with its most progressive retailers.
Frito-Lay uses crowdsourcing to make its Super Bowl ads. This is an example of a primary activity in
the value chain
T. Marketing and sales activities are associated with purchases of products and services by end users and
the inducements used to get them to make purchases. They include advertising, promotion, sales force,
quoting, channel selection, channel relations, and pricing. Frito-Lay uses crowdsourcing to create
competition for ads. The best ones air during the Super Bowl.
Establishing a customer service hotline to handle customer complaints would be considered a primary
activity in value-chain analysis.
T
At Sephora.com, a customer service representative taking a phone call from a repeat customer has
instant access to what shade of lipstick she likes best. This is an example of a procurement support
activity in the value chain.
F
Customer service includes
A. product promotion.
B. procurement of critical supplies.
C. product distribution.
D. parts supply.
D. Service activity includes all actions associated with providing service to enhance or maintain the value
of the product, such as installation, repair, training, parts supply, and product adjustment.
What does service activity include in relation to product value?
A) Marketing strategies and advertising campaigns
B) Installation, repair, training, parts supply, and product adjustment
C) Manufacturing and production processes
D) Financial forecasting and budgeting
B
Which of the following lists consists of support activities?
A. human resource management, technology development, customer service, and procurement
B. human resource management, customer service, marketing and sales, and operations
C. customer service, information systems, technology development, and procurement
D. human resource management, technology development, procurement, and general administration
D
Which of the following is a support activity?
A. inbound logistics
B. customer service
C. technology development
D. operations
C
What does procurement refer to in the context of a firm’s value chain?
A) The process of selling finished products to customers
B) The process of purchasing inputs such as raw materials, supplies, and assets
C) The management of customer relationships
D) The development of marketing strategies
B
Technip has developed intelligent pipes that can monitor and regulate the temperature throughout an oil
pipeline. This is an example of a procurement support activity in the value chain
F. Technology development
Technology development is a much broader concept than research and development.
T. Technology development related to product features supports the entire value chain, while other technology development is tied to specific primary or support activities.
Human resource management consists of activities involved in the recruiting, hiring, training,
development, and compensation of all types of personnel. It supports
A. only individual primary activities.
B. mostly support activities but does have some impact on primary activities.
C. only individual support activities.
D. both individual primary and support activities and the entire value chain.
D
According to value-chain analysis, which of the following would be considered part of the general
administration in a firm?
A. information systems
B. technology development
C. human resource management
D. procurement
A
What does general administration encompass?
A) Only finance and accounting
B) Only legal and government affairs
C) A range of activities including management, planning, finance, and information systems
D) Only quality management
C. support the entire value chain
In a retail service industry, which of the following is not a primary value-chain activity?
A. purchasing goods
B. human resource management
C. partnering with vendors
D. operating stores
B
What is the focus of Level 1 interrelationships in the value chain?
A) Relationships with customers
B) Interrelationships among activities within the firm
C) Collaborations with suppliers
D) External market conditions
B
A marketing department that promises delivery faster than the ability of the production department to
produce is an example of a lack of understanding of the
A. interrelationships among functional areas and firm strategies organizational culture and leadership.
B. organizational culture and leadership.
C. need to maintain the reputation of the company.
D. synergy of the business units
A
Level 2 interrelationships in the value chain primarily involve:
A) Internal department collaborations
B) Relationships between the firm and external stakeholders
C) Employee training programs
D) Financial reporting
B
What is the primary focus of integrating customers into the value chain?
A) Reducing costs
B) Enhancing competition
C) Strengthening the relationship between the organization and its customers
D) Streamlining operations
C
What is a key benefit of directly incorporating customers into the value creation process?
A) Decreased production time
B) Increased customer satisfaction and loyalty
C) Reduced marketing expenses
D) Simplified logistics
B
In the prosumer concept, who collaborates with firms?
A) Competitors
B) Suppliers
C) Customers (prosumers)
D) Investors
C
Which of the following is a potential outcome of involving prosumers in product design?
A) Higher manufacturing costs
B) Increased employee turnover
C) Insights leading to cost-saving initiatives
D) Reduced customer engagement
C
In terms of value chain analysis, a telephone operating company would find that negotiating and
maintaining ongoing relations with regulatory bodies are important activities for achieving
A. returns on investment.
B. customer awareness.
C. competitive advantage.
D. better employees.
Although general administration is sometimes viewed only as overhead, it can be a powerful source of
competitive advantage. In a telephone operating company, for example, negotiating and maintaining
ongoing relations with regulatory bodies can be among the most important activities for competitive
advantage.
C
General administration is sometimes viewed as only _______ but can be a powerful source of
competitive advantage.
A. income
B. value
C. overhead
D. unimportant
C
German truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers that are operators of
truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated
application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced
trailer. This is an example of using ________ to enhance customer value and increase _______ position.
A. sales; competitive
B. operations; marketing
C. information technology; competitive
D. human resources; marketing
C
In an interview with Lise Saari, former director of global workforce research at IBM, she notes that HR
must be a true partner of the business, with a deep and up-to-date understanding of business realities and
objectives, and must ensure HR initiatives fully support them at all points of the value chain. This is an
example of
A. relationships among activities within the firm and with other stakeholders.
B. relationships between firms.
C. interrelationships among activities within the firm.
D. interrelationships among firms.
c
Regarding the value-chain concept, the most important interrelationship is between the organization and
its
A. board of directors.
B. employees.
C. management.
D. customers.
D
