Page 133 -

132 Part One Organizations, Management, and the Networked Enterprise

FIGURE 3.9 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.

Primary activities are most directly related to the production and
distribution of the firm’s products and services, which create value for the
customer. Primary activities include inbound logistics, operations, outbound
logistics, sales and marketing, and service. Inbound logistics includes receiving
and storing materials for distribution to production. Operations transforms
inputs into finished products. Outbound logistics entails storing and distribut-
ing finished products. Sales and marketing includes promoting and selling the
firm’s products. The service activity includes maintenance and repair of the
firm’s goods and services.
Support activities make the delivery of the primary activities possible
and consist of organization infrastructure (administration and management),
human resources (employee recruiting, hiring, and training), technology
(improving products and the production process), and procurement (purchas-
ing input).
Now you can ask at each stage of the value chain, “How can we use information
systems to improve operational efficiency, and improve customer and sup-
plier intimacy?” This will force you to critically examine how you perform
value-adding activities at each stage and how the business processes might be
improved. You can also begin to ask how information systems can be used to
improve the relationship with customers and with suppliers who lie outside the
firm’s value chain but belong to the firm’s extended value chain where they

MIS_13_Ch_03_Global.indd 132 1/17/2013 2:26:24 PM