Kenneth C. Laudon,Jane P. Laudon Management Information System 12th Edition pdf

Benchmarking

involves comparing the efficiency and effectiveness of your business processes

against strict standards and then measuring performance against those

standards. Industry 

best practices 

are usually identified by consulting compa-

nies, research organizations, government agencies, and industry associations as

the most successful solutions or problem-solving methods for consistently and

effectively achieving a business objective.

Once you have analyzed the various stages in the value chain at your

business, you can come up with candidate applications of information systems.

Then, once you have a list of candidate applications, you can decide which to

develop first. By making improvements in your own business value chain that

your competitors might miss, you can achieve competitive advantage by

attaining operational excellence, lowering costs, improving profit margins, and

forging a closer relationship with customers and suppliers. If your competitors

are making similar improvements, then at least you will not be at a competitive

disadvantage—the worst of all cases!

FIGURE 3-11

THE VALUE CHAIN MODEL

This figure provides examples of systems for both primary and support activities of a firm and of its

value partners that can add a margin of value to a firm’s products or services.

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Part One

Organizations, Management, and the Networked Enterprise

E x t e n d i n g   t h e   Va l u e   C h a i n :   T h e   Va l u e   W e b

Figure 3-11 shows that a firm’s value chain is linked to the value chains of its

suppliers, distributors, and customers. After all, the performance of most firms

depends not only on what goes on inside a firm but also on how well the firm

coordinates with direct and indirect suppliers, delivery firms (logistics partners,

such as FedEx or UPS), and, of course, customers. 

How can information systems be used to achieve strategic advantage at the

industry level? By working with other firms, industry participants can use

information technology to develop industry-wide standards for exchanging

information or business transactions electronically, which force all market

participants to subscribe to similar standards. Such efforts increase efficiency,

making product substitution less likely and perhaps raising entry costs—thus

discouraging new entrants. Also, industry members can build industry-wide, 

IT-supported consortia, symposia, and communications networks to coordinate

activities concerning government agencies, foreign competition, and compet-

ing industries. 

Looking at the industry value chain encourages you to think about how to

use information systems to link up more efficiently with your suppliers,

strategic partners, and customers. Strategic advantage derives from your

ability to relate your value chain to the value chains of other partners in the

process. For instance, if you are Amazon.com, you want to build systems

that:

• Make it easy for suppliers to display goods and open stores on the Amazon

site

• Make it easy for customers to pay for goods

• Develop systems that coordinate the shipment of goods to customers

• Develop shipment tracking systems for customers

Internet technology has made it possible to create highly synchronized

industry value chains called value webs. A