1. Excel Presentation Chapter 3
How Does Competitive Strategy Determine Business Processes and Structure of Information Systems?
Excel Presentation
Chapter 3

2. Fig 3-10 Business Process & Information System for Bike Rental
Q6 – 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. Q6 – 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 value-generating activities.
Once those decisions have been made, a business can structure an information system that supports its business processes.
© Pearson Prentice Hall 2009

4. Cost of Current Inventory Revenue as percent of Cost of Inventory
Resort Bicycle Rental
Bicycle Inventory Valuation
Monday, October 29, 2007
Make of Bike
Bike Cost
Number on Hand
Cost of Current Inventory
Number of Rentals
Total Rental Revenue
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
$385 4
$1,540 34
$4,570
$1,143
296.8%
Wonder Bike Supreme
$475 8
$3,800 44
$5,200
$650
136.8%
LiteLift Pro
$655
$5,240 25
$2,480
$310
47.3%
LiteLift Ladies
$2,620 40
$6,710
$1,678
256.1%
LiteLift Racer
$795 3
$2,385 37
$5,900
$1,967
247.4%

5. Resort Bicycle Rental Bicycle Inventory Valuation Make of Bike
Monday, October 29, 2007
Make of Bike
Bike Cost
Number on Hand
Cost of Current Inventory
Rent Price
Number of Rentals
Total Rental Revenue
Revenue per Bike
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
LiteLift Pro
$655
$5,240
$99.20 25
$2,480
$310
47.3%
32.0%
-$2,760
LiteLift Ladies
$2,620
$167.75 40
$6,710
$1,678
256.1%
10.0%
$4,090
LiteLift Racer
$795 3
$2,385
$159.46 37
$5,900
$1,967
247.4%
8.1%
$3,515
Average per Bike
$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

6. Three examples of decisions that management might make.
Sell all LiteLift Pro’s because the product does not rent well even with a lower price and has lost Resort Bicycle Rental money.
If stock outs have lost them money they should buy more LiteLift Racer’s and maybe LiteLift Ladies and Wonder Bike II also.
To set productivity Benchmarks for every product to meet like:
Revenue as percent of Cost of Inventory to be over 200%.

7. Resort Bicycle Rental Bicycle Inventory Valuation
Bicycle Inventory Valuation
Monday, October 29, 2007
Make of Bike
Bike Cost
Number on Hand
Cost of Current Inventory
Rent Price
Number of Rentals
Total Rental Revenue
Revenue per Bike
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
LiteLift Ladies
$655
$2,620
$167.75 40
$6,710
$1,678
256.1%
10.0%
$4,090
LiteLift Racer
$795 3
$2,385
$159.46 37
$5,900
$1,967
247.4%
8.1%
$3,515
Average Per Bike
$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