Lecture 3 - e-Business Relationships

Question 1

What is the value chain?

Answer 1

A model that describes a series of value-adding activities connecting a company’s supply side with the demand side.

Supply side = raw materials, inbound logistics, production processes

Demand side = outbound logistics, marketing, sales

Question 2

What is the use of a value chain?

Answer 2

Gives managers a tool to analyze and, if necessary, redesign their internal and external processes to improve efficiency and effectiveness

Question 3

Which two types of activities are explained through the value chain?

Answer 3

1. Primary activities

2. Support/secondary activities

Question 4

What are primary activities in the value chain?

Answer 4

Activities that have a direct relationship, potential or actual with the customer. They deliver direct value.

e.g. inbound logistics, manufacturing etc.

Question 5

What are support activities in the value chain?

Answer 5

Activities that provide inputs and infrastructure that allows the primary activities to be performed. They deliver indirect value.

e.g. HRM, Technology development

Question 6

What is System dynamics?

Answer 6

A different framework that is better suitable for modelling business relationships for complex activities/processes.

-> Mainly used for policy analysis and design

Question 7

What are 5 types of primary activities?

Answer 7

1. Inbound logistics
   receiving/storing/disseminating inputs for the production process
2. Operations
   all processes related to transforming inputs into outputs
3. Outbound logistics
   All activities concerned with the distribution of the products/services to customers
4. Marketing/sales
5. Service
   Includes repairs, maintenance, follow ups etc.

Question 8

What are 4 types of secondary activities?

Answer 8

1. Firm infrastructure
   Administration, general management for planing and control
2. Human Resource Management
3. Product/Technology Development
   All activities related to product/process development
4. Procurement

Question 9

What type of companies is the value chain applicable to?

Answer 9

• > Production companies

- > for service companies, the model should be adapted (not mentioned how), but the idea remains the same

Question 10

How do you calculate profit margin in the value chain (and what is one consideration)?

Answer 10

Add up all the cost associated with each activity. Substract the total from the revenue –> profit.

*note: It is not good to focus on cutting down cost in all activities to increase profit margin –> more aspects such as quality are involved as well.

Question 11

How many value chains does a company normally have?

Answer 11

Between 3 to 15. Depending on number of products/services in their offering.

Question 12

What is the difference between the value chain and the supply chain?

Answer 12

Value chain focuses on the activities in an organization, dividing them by activities that add direct value and activities that add indirect value.

Supply chain focuses on the physical product and the distribution thereof.

Question 13

What is the relationship between the value chain and business processes?

Answer 13

Value chain defines the task a BU is doing. This task is comprised of a set of business processes.

Question 14

What is all included in the supply chain?

Answer 14

Network of facilities & distribution options for the procurement & acquisition of material, processing & transformation of the material into intermediate & finished tangible products to the customers.

Question 15

What is Value Chain analysis, and what are its 4 steps?

Answer 15

Identifying the activities of the firm and then studying the economic implications of those activities.

1. Defining the strategic BU
2. Identify critical activities
3. Define products
4. Determine the value of an activity

Question 16

What is a business process?

Answer 16

One or more related activities that together respond to a business requirement for action.

Definition: “Any sequence of steps that is initiated by an event, transforms information, materials, or business commitments & produces an output”.

Question 17

How can you decompose a value chain with all the processes into building blocks?

AKA: What is the process definition hierarchy?

Answer 17

The value chain is comprised of sets of business processes. Each business process exist out of sub-processes. These sub-processes are activities, which can be (1) simple or (2) compounded.

Question 18

What is a workflow?

Answer 18

The sequence of processing steps during which information and physical objects are passed from one processing step to the other. It links together technologies and tools able to automatically route events and tasks with programs or users.

Question 19

What is a process-oriented workflow?

Answer 19

Used to automate processes whose structure is well defined and stable over time.
Once automated, it only requires minor user involvement.

Question 20

What are the 7 characteristics of business processes?

learn by heart

Answer 20

1. Processes exist within an environment
   (both internal as external business environment)
2. Every process has a customer & is initiated by a customer
   (can also be an internal customer)
3. Every business process implies processing
   (A series of processing steps is involved)
4. Communication is an important part of any process
   (both within the process as within the environment)
5. They have inventories or queues
   (steps where there is waiting for processing)
6. They have decision points.
   (decisions about routing and allocation of capacity)
7. Every process delivers a product.

Question 21

What 2 types of processes/workflows are there?

Answer 21

1. The workflow where the information processing supports physical products
2. The workflow where information processing is the process

Question 22

What does the level of anticipation of the stimulus determine?

Answer 22

The extent to which an organization can be prepared for in time execution of a specific process.

Question 23

What type are ALL e-business relationships?

Answer 23

Inter-business relationship

Question 24

What further 3 types of relationships are there in e-business?

Answer 24

1. Operational level
   No sharing of information, just orders placed –> another business can fulfill your current need.
2. Tactical level
   Same as operational, but for recurrent demands. So it is for a specific period of time/amounts for which agreements are made.
3. Strategic level (AKA Value Added Partnerships)
   Acting collaboratively to co-develop something

Question 25

How is the information exchange different between the 3 types of relationships?

Answer 25

1. Operational
   No sharing, just direct ordering. Quality requirements, price determination and delivery is discussed.
   Also called ‘spot buying and selling’.
2. Tactical
   Involves mutual planning, exchange of longer-term planning & data.
3. Strategic
   Lots of info sharing, may include collaboration on design & development, joint decision making, market approach etc.

Question 26

So, depending on the way companies interact (based on the levels of relationship) - what three TEMPORAL relationships are there between companies?

Answer 26

1. Buy & sell on a ‘spot’-market.
2. Longer-term relationship, when there is a regular need.
3. Partnership, in which trading partners work together for the longer term and might pursue a joint competitive strategy.

Question 27

What does system dynamics try to understand and which 5 concepts are used for that purpose?

Answer 27

Tries to understand the nonlinear behavior of complex systems over time using the following key concepts:
(This is al in the context of a system)

1. Stock (people or things)
2. Flow (movement of people or things)
3. Feedback (what is the effect of a causal impact)
4. Table function (numeric table version of a graphical function)
5. Time delay (delay in the flow of people or things)