In this chapter, students will be able to understand: How business make profit (value chain), how is create added value, how business make decision (organizational pyramid), how is help in decision making process. | Information Systems for Value Driven Business LEARNING OBJECTIVES How business make profit (Value Chain) How IS create added value How business make decision (Organizational Pyramid) How IS help in decision making process Value Chain & Five Forces Model Revisited If an organization wants to decrease its buyer’s or customer’s power, it can construct its value chain activity of “service after the sale” by offering high levels of quality customer service This will increase the switching costs for its customers, thereby decreasing their power (buyer power) FIRM INFRASTRUCTURE INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTIC MARKETING & SALES LOGISTIC SERVICE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT VALUE COST MARGIN How Business Survive/Make Profit: Value Chain Model How Business Survive/Make Profit: Value Chain Model . . . Customer-Value-Added Activity (maximize) a business process that a customer is willing to pay for (utility) Business-Value-Added Activity (minimize) a business process that is essential to managing an organization (costs) Non-Value-Added Activity (eliminate) customer will not pay for; business value will not be increased (waste) Goals of a business system: effective(do right thing), efficient(do thing right), competitive (do thing differently). Value-Added Activities Automating: doing things faster/cheaper Organizational Learning: doing things better way (from lessons learned) Supporting Strategy: doing things smarter than competitors to meet customer’s needs. Contribute to Value Added Activities in Value Chain How Information Systems Add Values ? IT/IS improves or innovates the use of knowledge in operations of the value chain and value system IT/IS improves products or services by increasing quality, reducing costs, or adding desirable features IT/IS provides timely and reliable information to enhance the decision-making process IT/IS improves communication | Information Systems for Value Driven Business LEARNING OBJECTIVES How business make profit (Value Chain) How IS create added value How business make decision (Organizational Pyramid) How IS help in decision making process Value Chain & Five Forces Model Revisited If an organization wants to decrease its buyer’s or customer’s power, it can construct its value chain activity of “service after the sale” by offering high levels of quality customer service This will increase the switching costs for its customers, thereby decreasing their power (buyer power) FIRM INFRASTRUCTURE INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTIC MARKETING & SALES LOGISTIC SERVICE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT VALUE COST MARGIN How Business Survive/Make Profit: Value Chain Model How Business Survive/Make Profit: Value Chain Model . . . Customer-Value-Added Activity (maximize) a business process that a customer is willing
