Chapter 3 


-An organizations goals are and objectives are determined by its competitive strategy. 

Five forces determine industry profitability.

*Bargaining Power of customers- Strong force: Toyota's paint (they have a customer that will purchase at high volume)

*Threat of substitutions- Strong Force: Frequent traveler's choice of auto rental.

*Bargaining power of suppliers: New car dealers (because they control that the "trie price" is without the customer knowing the true accuracy of the price that particular car.

*Threat of the new entrants: Corner latte stand (because of easy business replication)

*Rivalry: Used car dealers (Many options to choose from from a customers perspective)

-An organization responds to the structure by using a competitive strategy.  


~Model~

Cost

(A) Industry wide- Lowest cost across the industry.

(B) Focus- Lowest cost within an industry segment. 


 Differentiation- 

(A) Better product/service across the industry.

(B) Better productive/service within an industry segment.


*Value- The amount of money that a customer is willing to pay for the resource. 

*Margin- The difference between the value that an activity generates and the cost of the activity.

*Value chain- a network of value-creating activities.

~Primary Activity

*Inbound Logistics-Recieveing storing, and disseminating inputs to the products.

* Operations/Manufacturing- Transforming inputs into the final product.

*Outbound logistics- Collecting, storing, and physically distributing the products to buyers.

*Sales and Marketing- Inducing the buyers to purchase the products and providing a means for them to do that.

*Customer Service- Assisting customers' use of the products and thus maintaining and enhancing the products' value.

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*Linkages- interactions across the value activities.
Ex: Manufacturing systems use linkages to reduce inventory costs.

*Business process- A network of the activities that generate the value by transforming inputs into outputs.

*The ( Cost ) of the business process in the cost of the inputs plus the cost of the activities.

*activity- Each activity is business function that receives inputs and produces outputs.

*Repository- A collection of something.
Ex: A database