LECTURE 3 - E-BUSINESS RELATIONSHIPS Flashcards
Value chain
Model that describes a series of value-adding activities that are performed to design, produce, market, deliver, and support its products or services.
By adding up all the costs associated with each activity in a value chain, and subtracting the total from the revenue derived from the output, an organization can determine the profit margin.
Organizations typically support from 3 to 15 value chains
Primary activities of a value chain
Activities that deliver value or things or perform certain action towards the product/service the company produces.
- Inbound logistics
- Operations
- Outbound logistics
- Marketing & Sales
- Service
Support activities of a value chain
Execution of primary activities requires support activities, they deliver value in an indirect manner, not directly related to the product/service, to make sure the primary activities work
- Firm infrastructure
- HRM
- Product/technology development
- Procurement
Supply chain
Network of facilities & distribution options for procurement & acquisition of material, processing & transformation of the physical material into intermediate & finished products & finally the physical distribution of the finished tangible products to the customers (in manufacturing & service organizations).
Value chain analysis
Value Chain analysis starts by identifying the activities of the firm and then studying the economic implications of those activities
- Defining the strategic business unit(s) that are involved
- Identifying critical activities that these units perform
- Defining products/services
- Determining the value of an activity (faster, more money etc.)
Business processes & their management
- A business process consists of one or more related activities that together respond to a business requirement for action. It:
o defines the results to be achieved, the context of the activities, the relationships between the activities, and the interactions with other processes and resources.
o may receive events that alter the state of the process and the sequence of activities.
o may produce events for input to other systems or processes.
o may also invoke applications to perform computational functions, and it may post assignments to human work lists to request actions by human actors.
Workflow
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
Characteristics of business processes
- Processes exist within an environment, which is both the internal business environment in which the process operates and the external organizational environment that can trigger the process.
- Every process has a customer (can be another business unit within the company) & is initiated by a customer order.
- Every business process implies processing: a series of activities (processing steps) leading to some form of transformation of data or products for which the process exists. Transformations encompass multiple activities.
o If there are no activities/processing, there is no process - Communication is an important part of any business process. Communication will take place both within the process and with the environment
Hierarchical types of e-Business relationships
Operational level relationships: companies decide internally what they need & next look outside to see who can deliver. There is no sharing of information between the buyers & sellers. The only information exchanged concerns the orders placed. Problems here are:
o Independence, uncertainty & absence of opportunities to plan ahead.
- Tactical inter-firm relationships: agreements for a period about amount and type of products to buy (or sell), manufacturing series and reservation of production capacity, moments of delivery, inventories to be kept.
o As a result both organizations benefit from a more stable supplier/buyer relation, reduced uncertainty and so reduced inventory levels (e.g. safety stocks) and improved delivery times.
- Strategic level relationships: companies act collaboratively in a specific market where they produce specific product (co-development, Apple and Garmin for maps). The supplier develops, designs & produces specific components for the buying organization. These types of inter-firm collaborative relationships are called Value Added Partnerships.
System Dynamics
A methodology and mathematical modeling technique to frame, understand, and discuss complex issues and problems. Originally developed in the 1950’s to help corporate managers improve their understanding of industrial processes, System Dynamics is currently being used throughout the public and private sector for policy analysis and design.
System dynamics tries to understand the nonlinear behavior of complex systems over time using the following key concepts:
- Stock: an accumulation of people or things in a specific location or with a specific condition in a system. An element of a system that accumulates or drains over time. Stocks are the memory of a system and are only affected by flows.
- Flow: the movement of people or things between stocks within a system boundary or across the model boundary and thereby into or out of the system (through sinks and sources); changes in stocks over time. Flows represent activity, in contrast to stocks that represent the state of the system.
- Feedback: when the effect of a causal impact comes back to influence the original cause of that effect. A feedback loop is an alternating sequence of variables and causal links that creates a closed ring of causal influences.
- Table function: a numeric table version of a graphical function.
- Time delay: a delay in the flow of conserved material or people
