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

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

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

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%

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

Three examples of decisions that management might make. 1. Sell all LiteLift 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 LiteLift Racer’s and maybe LiteLift 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   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