Exam 2: Value Chains

While cultural differences are important in managing operations in different countries, they have little impact in designing the overall value chain.

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: Make in-house \ 15,000 \ 21.50 Buy from Singapore \ 0 \ 29.00 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?

Operational structure of the value chain deals with

A vertical integration strategy provides a firm more control and generally reduces the complexity of managing the value chain.

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

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): Make in-house \ 7,870 \ 3.20 Ma Ma's \ 860 \ 5.60 Chun-Yee \ 2.460 \ 4.50 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.

Offshoring generally lowers unit costs.

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.

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

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

Proportional increases or decreases in perceived benefits as well as price or cost result in no net change in value.

Differentiate a supply chain from a value chain.

A competitively dominant customer experience is often called a

A competitively dominant customer experience is often called a value proposition.

What makes global value chains more difficult to manage than small domestic value chains?

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. If outsourced, the cost is $80 per unit. Determine the breakeven point and determine if they should make the item in-house or outsource it.

"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

What are the major decisions a firm must address in designing and configuring a value chain?

Outsourcing is the opposite of vertical integration.