Chapter 4 - Business structure and performance management

Question 1

What is a joint venture?

Answer 1

A separate business entity whose shares are owned by two or more business entities.

Question 2

What are three reasons to form a joint venture?

Answer 2

• Gain knowledge, skills and experiance to create new products
• Share costs/risks/resources
• Flexibility

Question 3

What are three planning difficulties associated with joint ventures?

Answer 3

• Difficult to agree on common goals
• Difficult to agree on how to share resources
• Practicality of planning due to each entity may be in different location

Question 4

What are three Performance measurement difficulties associated with Joint Ventures?

Answer 4

• Different measurements systems
• Unwilling to share information
• Different opinions on measurement methods

Question 5

What is a Control difficulty associated with Joint ventures?

Answer 5

• Accountability needs to be set at outset

Question 6

What is a strategic alliance?

Answer 6

Similar to a JV but a separate business entity is not formed.

Question 7

What is an advantage of a strategic alliance over a Joint venture?

Answer 7

Greater flexibility since it is not constrained by the reporting and compliance requirements of a separate legal entity.

Question 8

What are some additional problems associated with a strategic alliance?

Answer 8

• Independence is retained, making the establishment of common goals and information collection more difficult.
• Security of information may be more of a concern due the lack of a separate legal entity.
• Does not have the other benefits that a separate legal entity may have.

Question 9

What are four benefits of supply chain partners?

Answer 9

• Harnessing the knowledge and skills of the various partners
• Build positive relationship on joint quest to reduce cost
• Work together to meet customer needs gaining competitive advantage
• Reduce reliance on small number of suppliers

Question 10

What are four challenges of supply chain partners?

Answer 10

• Can be difficult to manage a complex supply chain
• Each partnert will have own goals, these may not be aligned
• Skills are required to manage the relationship
• Measuring performance may be hard

Question 11

What are the five characteristics of services?

Answer 11

Intangibility
Hetrogeneity - Service required
Similtaneity
Perishability - No stock
No transfer of onwership

Question 12

What is business integration?

Answer 12

All aspects of the business must be aligned to secure the most efficient use of the organisation’s resources and achieve objectives

Question 13

What are the two frameworks for understanding integrated processes?

Answer 13

• Porter’s value chain model.
• McKinsey’s 7S model.

Question 14

What does Porters value chain focus on?

Answer 14

Activities rather than functional departments

Question 15

What are porters primary value activities?

Answer 15

• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• Service

Question 16

What are porters secondary value activities?

Answer 16

• Firm infrastructure
• Human resource management
• Technology development
• Procurement

Question 17

Give a description and example of the below

Inbound logistics

Answer 17

Receiving, storing and handling raw material inputs

A just-in-time stock system could give a cost advantage

Question 18

Give a description and example of the below

Operations

Answer 18

Transformation of raw materials into finished goods and services

Using skilled craftsmen could give a quality advantage

Question 19

Give a description and example of the below

Outbound logistics

Answer 19

Storing, distributing and delivering finished goods to customers

Outsourcing activities could give a cost advantage

Question 20

Give a description and example of the below

Marketing and sales

Answer 20

Market research and the marketing mix (product, price, place, promotion)

Sponsorship of a sports celebrity could enhance the image of a product

Question 21

Give a description and example of the below

After sales service

Answer 21

All activities that occur after the point of sale, such as installation, training and repair

A flexible approach to customer returns could enhance a quality image

Question 22

Give a description and example of the below

Firm infrastructure

Answer 22

How the firm is organised

Centralised buying could result in cost savings due to bulk discounts

Question 23

Give a description and example of the below

Technology development

Answer 23

How the firm uses technology

Modern computer-controlled machinery gives greater flexibility to tailor products to meet customer specifications

Question 24

Give a description and example of the below

Human resource management

Answer 24

How people contribute to competitive advantage

Employing expert buyers could enable a supermarket to purchase better wine than their competitors

Question 25

Give a description and example of the below

Procurement

Answer 25

Purchasing, but not just limited to materials

Buying a building out of town could give a cost advantage over High Street competitors

Question 26

What does the McKinsey 7S model describe?

Answer 26

An organisation as consisting of seven interrelated internal elements.

Question 27

What is the belief of McKinsey 7S model?

Answer 27

All seven elements must be aligned to ensure organisational success.

Question 28

What are the three hard elements of McKinsey 7S model?

Answer 28

• Strategy
• Structure
• Systems

Question 29

What are the four soft elements of McKinsey 7S model?

Answer 29

• Skills
• Staff
• Style
• Shared values

Question 30

What is Business Process Re-engineering (BPR)

Answer 30

The fundamental rethinking and radical redesign of business processes:
- to achieve dramatic improvements in critical, contemporary measures of performance