Organisational Technologies Technology can either be: Long linked Intensive Mediating

Long linked technology Interdependencies are sequential Tasks accomplished serially Continuous output of a standard product e.g. a continuous process – continuous chemical processing

Intensive Technology Solving highly specific problems Iterative approach Intense interaction between problem solvers and problem e.g. work carried out in a medical hospital (note new way of looking at the value chain by Stabell & Fjeldstad termed The Value Shop)

Mediating Technology Provides the service of connection between two or more customers who wish to be interdependent. e.g. 1.borrowers and lenders, 2.buyers and sellers (note this gives rise to a new value chain configuration is termed The Value Network)

Value Chain Primary activities; Inbound logistics, Operations, Outbound logistics, Marketing and Sales, Services. Secondary Support activities; infra structure – human resource, management, technology development and procurement

Firm infrastructure activities Human resource management Research, development and design Purchasing, inventory holding, materials handling Manufacturing Outbound logistics Marketing & Sales Dealer support and customer service Support activities Primary activities Purchasing Vendor relations Inbound logistics Inventory holding Materials handling Integration Raw materials Capacity Location Parts production Assembly Prices Advertising Promotion Sales force Packaging Brand Channels Inventory Warehousing Transport Warranty Speed Captive/ independent Value chain

ProcurementR&DOperationsMarketingDistributionService Purchasing Vendor relations Inbound logistics Inventory holding Materials handling Source Sophistication Patents Product tech. Process tech. Product design Integration Raw materials Capacity Location Procurement Parts production Assembly Prices Advertising Promotion Sales force Packaging Brand Channels Integration Inventory Warehousing Transport Warranty Speed Captive/ independent Firm infrastructure Human resource management Technology development Inbound logistics OperationsOutbound logistics Marketing & Sales Service Procurement Support activities Primary activities Value chain

Affect of the Internet on the value chain Mediating technology property Universality Time moderation Distribution channels Information Asymmetries Transaction Costs Scalability Infinite virtual capacity

Mediating Technologies Enables firms to learn more about end users (refer to Guest histories case) May allow more direct contact with customers 2 way flow of information – dual role of marketing Example from industry Netscape issued pre- release beta versions of software – used users input to debug the software.

Universality Geographic scope Another medium to market and sell products Local businesses can reach outside their geographic area and serve a larger audience – Jack Scaiffe Chen. S p18 Amazon.com geographic reach impossible before the internet

Time Moderator Affects the earlier stage of the value chain –Wider choice of inputs, distributed manufacturing and remote testing Around the clock software production USA-Europe-India

Distribution Channels Information, software delivered instantaneously Affects the outbound logistics of the value chain –Can eliminate the copying of discs, storage and shipping –Related problem of piracy of software

Information Asymmetry and Transaction Costs Results in Disintermediation –Buying books directly from publishers –E.g. Dell Computers selling direct to consumers, reduced losses usually encountered by returns from retail outlets due to obsolete machines remaining unsold in the stores due to the pace of development of IT.

Scalability & Virtual Capacity Information intensive businesses + advances in computer technology + larger customer base via the internet, enables a much larger scale of operations than previously possible. Primary activities of firms in information based industries and many retailers have seen major impacts on their businesses Other businesses – the internet impacts with the value chain mainly in Marketing and Sales

The Value Shop Porter’s idea of benchmarking the performance of primary activities of the ‘Value Chain’ forces the company into a business model centred around manufacturing. Stabell & Fjeldstad‘Configuring value for competitive advantage’

The Value Shop Find out what the customer wants? Problem finding – working with the client to identify problem or need. Problem solving – generation of ideas and actions. Choice – choosing between alternatives. Execution – communicating, organising, implementing Control & Evaluate – monitor and measure the solution to the problem. Proble m finding Proble m solvin g Choic e Executi on Control & Evaluate

Value shop Problem Finding Collect patient history Patient examination Diagnostic tests Maintain patient data Problem Solving Generate treatment plans Evaluate treatment plans Control/Evaluation Monitor patient history Maintain patient data Execution Treatment Choice Choice of treatment plan Value shop of a general practitioner

Internet affects on Primary Activities of the Value Shop 1.Larger scale of operations 2.Widens geographic scope 3.More information to be collected and processed 4.New delivery medium Note value shops are created or destroyed by its ability to solve problems for the client. ** Competition from the internet to deliver answers to ignorant clients

The Value Network Although Disintermediation exists the value network is the value configuration that exists when a firm is an Intermediary * Most top retailers are Intermediaries

Primary Activities of the Value Network To remain competitive they need to focus on:- 1.Network promotion and contract management 2.Service provision 3.Infrastructure operations

Network Promotion Promoting and building the network Acquiring customers Managing contracts and service provision –Initiation, maintenance termination Active selection of customers

Service Provision Linking people in the network and then collecting payment from them for the connection –Setting up contacts –Maintaining for the appropriate amount of time –Ending contacts –Collecting payments

Infrastructure Operations Activities allow efficient operation Ready to provide service to the next customer Can be both physical and information based e.g. financial services companies – infra structure activities are within the branch offices, financial assets or connections to the trading floor

Value Network Firm infrastructure Network promotion & Contract management Sell services Evaluate risk Contract Monitor contracts Terminate contracts Service provisioning Deposit Withdraw Transfer funds Maintain account balances Calculate interest Infrastructure operation Operate branch offices Operate ATMs Operate IT systems Maintain liquidity Link with correspondent banks/central bank Design new services Program service routine Reconfigure branch office infrastructure Expand communication network Set standards Bank example

How does the internet affect the primary activities of the Value Network? 1.It compound network externalities 2.It widens the geographic scope of the network 3.It enables a larger scale of network

Mediating Technology and Network Externalities Network externality is probably the most important property influencing the value network. i.e. a music service that recommends CD’s on the one you recently bought will not make very good recommendations if it has only three customers

Universality, Time Moderation and Distribution Channels Widens geographic scope of the network Offers potential new channels ( internet phone)

Scalability and Infinite virtual capacity Infrastructure operation enables network to have a larger scale – adding value. Increase in computing power enables more customers to be served

AuthorsPublishersWholesalersRetailers Customer Consumer Britannica Author and Publisher Customer Consumer Microsoft Mutlimedia capabilities (motion) Searching ability Links to the rest of the world Limitless capacity Frequent and instantaneously available updates Saves space and weight Customers go to Microsoft No printers, No door-to-door salespeople More fun for kids Available to anyone anywhere anytime Customers can form communities The Internet offers:

Summary Eliminating geographic distance – most important to all three value configurations. Value chain – keeping costs low through more efficient procurement and logistics Value shop – increasing the amount of exploitable information –(Tacit knowledge) Value network – the ability to build networks quickly to take advantage of network externalities