Mis Collaboration Excerise 3

1. Value is the amount of money the customer is willing to pay for resource, product, or service and cost is the competitive strategy the company uses to sell its products. Cost can allow the company to sell its products at a lower price to industry-wide companies or it can differentiate to keep up with competition. The difference between the two is margin, and a company adds cost to an activity only as long as the activity has a positive margin. If their systems provide more benefits than risk and the margin is positive, if would make sense to add cost to your business process.

2. If the process shown has a negative margin, it means that the value amount that the customers are paying is not covering enough of the cost of the activities. Something has to be changed for the business to continue to run. Either the value the customers pay needs to increase, i.e. increase the price per hour customers are paying, or the activities need to decrease, i.e. buy cheaper parts or bikes, or cut labor somewhere. If some business process had a margin of negative $1 million, and costs were reduced by $1.2 million, the margin would then be positive. The margin is the value paid by customers minus the cost of activities. This reduction would then put the business at positive $200,000. If the business was negative $1 million, it means that the activities were costing the company $1 million more than the customers were paying. Once the activities dropped $1.2 million, the customers were now paying $200,000 more than activities were costing the company.

3. a. The following changes will need to be changed to the process documented if we consider replacing the rental personnel from the business process:
Customer Data
(Determines Own Needs)
Rent Bike
Return Bike
& Pay
Bike Rental
Station
Bike
Inventory
Database
Customer
Database
Hotel Billing
System
Bicycle
Inventory
Update Bike Checkout
Update Customer Data
Update Customer Data
Query for Available
Update