Exam 2: Value Chains

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

Define value and discuss three (3) ways for organizations to increase value.

The control of Wal-Mart's value chain is ____, while the control of General Electric's is ____.

A company has two alternatives for meeting a customer requirement for 9,000 units of a specialty molding. If done in-house, fixed cost would be $350,000 with variable cost at $30 per unit. Alternative two is to outsource for a total cost of $80 per unit. Determine the breakeven quantity and determine if they should make the item in-house or outsource it.

A competitively dominant customer experience is often called a

A value chain views an organization from an integrative perspective of goods and services, while a supply chain focuses mainly on the creation of physical goods.

Forward integration might include acquiring a customer.

A U.S. motorcycle manufacturer has the option of either making the gas tank in their newly designed cycle, or subcontracting it out to a Singapore manufacturer. Costs for the two options are: a.Which option would be preferred at an annual volume of 1,000 gas tanks? b.Which option would be preferred at an annual volume of 5,000 gas tanks? c.For what range of production volume would it be better to make the gas tanks in-house?

A value chain begins with the goods and services that are provided to customers.

One approach to increasing value is to maintain perceived benefits while increasing price or cost.

Differentiate a supply chain from a value chain.

Post-production services might include customer financing, customer benefit package design, and promotion/advertising.

Operational structure of the value chain deals with

Offshoring generally lowers unit costs.

"The perception of the benefits associated with a good, service, or bundle of goods and services in relation to what buyers are willing to pay for them" is the definition of

A large hotel-casino in Las Vegas is currently under construction. There will be an Italian restaurant in the hotel that will serve pizza. Management is trying to decide whether to make the pizza themselves or buy it frozen and simply heat it to customer order. There are two major sources of commercial-grade frozen pizza: Ma Ma's Products and the Chun-Yee Corporation. If they make the pizza themselves a substantial amount of preparation equipment will be required, along with skilled personnel. Frozen pizza needs either a conventional oven (Ma Ma's) or a microwave (Chun-Yee). Financial data is as shown below (variable costs are estimated based on an average pizza purchase): a.At what volume is either Ma Ma's or Chun-Yee acceptable? b.At what volume is the company indifferent to either Chun-Yee or make in-house?

A value chain describes the flow of customer information through a production system.

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

A manufacturing company needs to know whether to make in-house or buy a roller gear assembly for its new fax machine production. The company expects to produce 9,000 units per year. The following estimates have been made: a.What is the annual cost to make the roller gear assembly in-house? b.What is the annual cost to buy the roller gear assembly? c.At what volume are they indifferent regarding the decision to make or buy?

From the pre- and post-service view, transportation service, training service and consulting and technical services would be considered