Page 60 - Electronic Commerce

Introduction to Electronic Commerce

managing salespeople, pricing, and identifying and monitoring sales and dis-
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tribution channels
• Deliver: activities that store, distribute, and ship the final product or provide
the service, including warehousing, handling materials, consolidating freight,
selecting shippers, and monitoring timeliness of delivery
• Provide after-sale service and support: activities that promote a continuing
relationship with the customer, including installing, testing, maintaining,
repairing, fulfilling warranties, and replacing parts
The importance of each primary activity depends on the product or service the
business unit provides and to which customers it sells. Each business unit must also have
support activities that provide the infrastructure for the unit’s primary activities. The
central corporate organization typically provides the support activities that appear in
Figure 1-9. These activities include the following:
• Finance and administration activities: providing the firm’s basic infrastruc-
ture, including accounting, paying bills, borrowing funds, reporting to
government regulators, and ensuring compliance with relevant laws
• Human resource activities: coordinating the management of employees,
including recruiting, hiring, training, compensation, and managing benefits
• Technology development activities: improving the product or service that the
firm is selling and that helps improve the business processes in every primary
activity, including basic research, applied research and development, process
improvement studies, and field tests of maintenance procedures

Industry Value Chains
Porter’s book also identifies the importance of examining where the strategic business unit
fits within its industry. Porter uses the term value system to describe the larger stream of
activities into which a particular business unit’s value chain is embedded. However, many
subsequent researchers and business consultants have used the term industry value chain
when referring to value systems. When a business unit delivers a product to its customer,
that customer might use the product as purchased materials in its value chain. By
becoming aware of how other business units in the industry value chain conduct their
activities, managers can identify new opportunities for cost reduction, product
improvement, or channel reconfiguration.
Every product or service is sold within an industry value chain that can be identified
and analyzed for these opportunities. To create an industry value chain, start with the
inputs to your strategic business unit and work backward to identify your suppliers’
suppliers, then the suppliers of those suppliers, and so on. Then start with your customers
and work forward to identify your customers’ customers, then the customers of those
customers, and so on.
An example of an industry value chain appears in Figure 1-10. This value chain is for
a wooden chair and traces the life of the product from its inception as trees in a forest to
its grave in a landfill or at a sawdust recycler.

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