Question 1

Define value and discuss three ways for organizations to increase value.

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Question 2

Contrast outsourcing with vertical integration. Also, contrast backward integration with forward integration.

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Question 3

Offshoring is the process of moving operations back to a company's domestic location.

Accepted Answer

Offshoring is the process of moving operations from a company's domestic location to a foreign location with lower costs. Moving operations back to a company's domestic location is known as reshoring or onshoring.

Question 4

Explain a value proposition. Relate this to a customer benefits package of goods and services.

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Question 5

Sustainable practices can lead to increased revenues.

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Sustainable practices can often lead to cost savings through reduced resource consumption and waste reduction. Additionally, consumers and investors are increasingly valuing sustainability efforts and may be more willing to purchase or invest in companies that prioritize sustainability. This can lead to increased revenues and positive brand reputation.

Question 6

Which of the following lessons from the Bookmaster case study is FALSE?
A) Total customer processing time increases in the traditional bricks-and-mortar book value chain compared to an e-book value chain.
B) An advantage of the internet-based e-book value chain is convenience.
C) The nature of service encounters changed from the traditional bricks-and-mortar book value chain to an e-book value chain.
D) The carbon footprint for the total traditional bricks and mortar book value chain is less than for an e-book value chain.

Accepted Answer

This lesson is false because studies have shown that the carbon footprint for the traditional bricks and mortar book value chain is actually higher than for an e-book value chain. Therefore, the correct lesson should be that the carbon footprint for the total traditional bricks and mortar book value chain is higher than for an e-book value chain.

Question 7

A company has two alternatives for meeting a customer requirement for 5,000 units of a specialty molding. If done in-house, fixed cost would be $350,000 and variable cost is $20 per unit. Alternative two is to outsource for a total cost of $40 per unit. Determine the break-even quantity and determine if they should make the item in-house or outsource it.

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Question 8

Explain the input-output perspective of a value chain.

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Question 9

Which one of the following statements regarding the Bookmaster case study is TRUE?
A) Advantages of the bricks-and-mortar value chain include more customization, more product variety, and using more customer labor (self-service).
B) Operations play no role in the Internet-based value chain.
C) The nature of the service encounter did not change between the bricks-and-mortar versus Internet-based value chain.
D) The case is an example of where physical assets are replaced by information.

Accepted Answer

The Bookmaster case study is an example of where physical assets are replaced by information. This is evident in the shift from the bricks-and-mortar value chain to the Internet-based value chain, where physical stores were replaced by an online platform. The nature of service encounter, advantages of value chain and the role of operations are not as relevant to the main theme of the case study.

Question 10

Value chain integration for goods-producing firms requires consolidating information systems among suppliers, factories, distributors, and customers; managing the supply chain and scheduling factories; and studying new ways to use technology.

Accepted Answer

Value chain integration involves consolidating information systems among various stakeholders involved in the production and distribution of goods, managing supply chain and scheduling factories efficiently, and exploring innovative ways to leverage technology.

Question 11

The decision to offshore or outsource involves a variety of economic and noneconomic issues.

Accepted Answer

The decision to offshore or outsource is a complex one that involves both economic and noneconomic issues. These issues may include cost savings, labor availability and skills, language barriers, cultural differences, geopolitical risks, intellectual property protection, and legal and regulatory compliance. Organizations must carefully evaluate these factors and weigh the potential benefits and risks before making a decision to offshore or outsource.

Question 12

Global value chains face higher levels of risk and uncertainty, requiring more inventory and day-to-day monitoring to prevent product shortages.

Accepted Answer

Global value chains involve multiple suppliers, manufacturers, and distributors across different countries and continents, which makes them more susceptible to disruptions such as natural disasters, changes in government policies, or trade tensions. As a result, companies need to hold more inventory and closely monitor their supply chains to avoid product shortages and delays.

Question 13

What are the major decisions organizations must address in designing and configuring their value chains?

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Question 14

General Electric would be considered a multinational enterprise because it sources, markets, and produces its goods in several countries.

Accepted Answer

A multinational enterprise is an organization that operates in more than one country. GE is a multinational enterprise because it operates in many countries around the world by sourcing materials, marketing its products, and producing goods in multiple locations.

Question 15

Third-party "system integrators" are often used for vertical integration strategies.

Accepted Answer

System integrators are typically used for horizontal integration, where they help integrate systems across similar processes or technologies, rather than vertical integration, which involves integrating different stages of production or distribution.

Question 16

Which one of the following statements is TRUE regarding the Bookmaster case study?
A) One advantage of the virtual (web-based) value chain is mass customization using
Self-service (i.e., customer labor).
B) One advantage of the bricks-and-mortar value chain is more customer convenience and scope of greater product selection.
C) One advantage of the virtual (web-based) value chain is more management control.
D) One advantage of the bricks-and-mortar value chain is less of a carbon footprint.

Accepted Answer

The virtual (web-based) value chain allows for mass customization through self-service, enabling customers to tailor products or services to their specific needs, which is a key advantage of this model.

Question 17

Two alternatives are being considered for a customer's order whose anticipated volume is not yet known. If the firm produces in-house, the fixed cost is $340,000 and variable cost is $2.90 per unit. If the firm chooses to outsource, it will incur a fixed cost of $275,000 and variable cost of $3.50 per unit. Determine the break-even quantity and a decision rule of when to outsource.

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Question 18

Differentiate a supply chain from a value chain.

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Question 19

Offshoring is the same as outsourcing in terms of transferring ownership and control.

Accepted Answer

Offshoring refers to relocating business operations to a foreign country while outsourcing refers to contracting out certain business processes to a third party. While both involve transferring a certain degree of work responsibility, ownership and control are not necessarily transferred in outsourcing as they still reside with the company.

Question 20

Explain the notion of value chain integration.

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Quiz 2: Value Chains