How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? Excel Presentation Chapter 3
Q 6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? Fig 3 -10 Business Process & Information System for Bike Rental © Pearson Prentice Hall 2009 3 -2
Q 6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? Each business must first analyze its industry and choose a competitive strategy. Will it be a low-cost provider or differentiate its products from competitors? Then it must design its business processes to span valuegenerating activities. Once those decisions have been made, a business can structure an information system that supports its business processes. © Pearson Prentice Hall 2009 3 -3
Resort Bicycle Rental Bicycle Inventory Valuation Monday, October 29, 2007 Make of Bike Cost Number Cost of Current Number of Total Rental on Hand Inventory Rentals Revenue per Bike Revenue as percent of Cost of Inventory Wonder Bike $325 12 $3, 900 85 $6, 375 $531 163. 5% Wonder Bike II Wonder Bike Supreme $385 4 $1, 540 34 $4, 570 $1, 143 296. 8% $475 8 $3, 800 44 $5, 200 $650 136. 8% Lite. Lift Pro $655 8 $5, 240 25 $2, 480 $310 47. 3% Lite. Lift Ladies $655 4 $2, 620 40 $6, 710 $1, 678 256. 1% Lite. Lift Racer $795 3 $2, 385 37 $5, 900 $1, 967 247. 4%
Resort Bicycle Rental Bicycle Inventory Valuation Monday, October 29, 2007 Make of Bike Cost Numb Cost of er Current on Inventory Hand Rent Price Number Total Revenue of Rental per Bike Rentals Revenue as percent of Cost of Inventory On Hand to Rentals Ratio Gross Profit Wonder Bike $325 12 $3, 900 $75. 00 85 $6, 375 $531 163. 5% 14. 1% $2, 475 Wonder Bike II Wonder Bike Supreme $385 4 $1, 540 $134. 41 34 $4, 570 $1, 143 296. 8% 11. 8% $3, 030 $475 8 $3, 800 $118. 18 44 $5, 200 $650 136. 8% 18. 2% $1, 400 Lite. Lift Pro $655 8 $5, 240 $99. 20 25 $2, 480 $310 47. 3% 32. 0% -$2, 760 Lite. Lift Ladies $655 4 $2, 620 $167. 75 40 $6, 710 $1, 678 256. 1% 10. 0% $4, 090 Lite. Lift Racer $795 3 $2, 385 $159. 46 37 $5, 900 $1, 967 247. 4% 8. 1% $3, 515 $548 6. 5 $3, 248 $125. 67 44. 2 $5, 206 $1, 046 191. 3% 15. 7% $1, 958 Total $3, 290 39 $19, 485 $754. 00 265 $31, 235 $6, 278 160. 3% 14. 7% $11, 750 Average per Bike
Three examples of decisions that management might make. 1. Sell all Lite. Lift Pro’s because the product does not rent well even with a lower price and has lost Resort Bicycle Rental money. 2. If stock outs have lost them money they should buy more Lite. Lift Racer’s and maybe Lite. Lift Ladies and Wonder Bike II also. 3. To set productivity Benchmarks for every product to meet like: Revenue as percent of Cost of Inventory to be over 200%.
Resort Bicycle Rental Bicycle Inventory Valuation Monday, October 29, 2007 Make of Bike Cost Numb er on Hand Cost of Current Inventory Number Total Rent Revenue of Rental Price per Bike Rentals Revenue as percent of Cost of Inventory On Hand to Rentals Ratio Gross Profit Wonder Bike $325 12 $3, 900 $75. 00 85 $6, 375 $531 163. 5% 14. 1% $2, 475 Wonder Bike II $385 4 $1, 540 $134. 41 34 $4, 570 $1, 143 296. 8% 11. 8% $3, 030 Wonder Bike Supreme $475 8 $3, 800 $118. 18 44 $5, 200 $650 136. 8% 18. 2% $1, 400 Lite. Lift Ladies $655 4 $2, 620 $167. 75 40 $6, 710 $1, 678 256. 1% 10. 0% $4, 090 Lite. Lift Racer $795 3 $2, 385 $159. 46 37 $5, 900 $1, 967 247. 4% 8. 1% $3, 515 $527 6. 2 $2, 849 $130. 96 48. 0 $5, 751 $1, 194 220. 1% 12. 4% $2, 902 Total $2, 635 31 $14, 245 $654. 80 240 $28, 755 $5, 968 201. 9% 12. 9% $14, 510 Average Per Bike
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