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Value Chain

Conceptualized organization of activities an organization performs to provide value to their customers.

Value Chain Parts

1. Inbound Logistics 2. Operations Activities 3. Outbound logistics 4. Marketing and sales 5. Service

Inbound Logistics

"Receiving, storing, and distributing the materials an organization uses to create the products and services it sells."

Operations Activities

Transform inputs into final products or services.

Outbound logistics

Distribute finished product or service to customers

Marketing and sales

Help customers buy the products or services the organization provides.


Provide post-sale support to customers

Support Activities

Allow the five primary activities (value chain parts) to be performed effectively and efficiently.

Support Activities Outline

1. Firm Infrastructure 2. Human Resources 3. Technology 4. Purchasing

Firm Infrastructure Activities

"Accounting, finance, legal and geneal administration activities that allow an organization to function."

Human Resources Activities

"Recruiting, hiring, training, and providing employee benefits and compensations."

Technology Activities

Improve a product or service.

Purchasing Activities

"Procure raw materials, supplies, machinery, and the buildings used to carry out the primary activities."

Supply Chain

A manufacturing organization interacts with its suppliers and distributors. Value chain is a part of this.

How an AIS can add value to an organization

1. Improving quality & reducing costs 2. Improving efficiency 3. Sharing knowledge 4. improving the efficiency and effectiveness of its supply chain 5. Improving the internal control structure 6. Improving decision making

Structured Decisions

"repetitive, routine, understood well enough to be delegated"

semi-structured decisions

incomplete decisions need for subjective assessments; can be computer aided

unstructured decisions

"nonrecurring and non-routine, require judgment and intuition. "

operational control

effective efficient performance of tasks

management control

effective and efficient use or resources

strategic planning

establishing objectives and policies to accomplish objectives.

product differentiation

adding features or services not provided by competitors

low-cost strategy

be the most efficient producer

variety-based strategic position

providing a subset of the industry ex. Jiffy Lube only oil changes

needs-based strategic position

trying to serve most or all of the needs of a particular group ex. AARP tries to get all retirees

access-based strategic position

serving a subset of customers who are different ex. Edward Jones only operates in small towns


the system is greater than the sum of its parts

predictive analysis

use data and algorithms to forecast future events

value of information

benefit produced by the information minus the cost of producing it


1. Reduction of uncertainty 2. Improved decisions 3. Better ability to plan activities

mandatory information

required by a governmental entity

essential information

required to conduct business with external parties

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