1. Explain the relationship of value and cost according to the Porter model. When does it make sense to add cost to a business process?

2. Suppose you are told that the business process in Figure 3-13 has a negative margin. Explain what that means. Suppose the margin of some business process is a negative $1 million. If costs are reduced by $1.2 million, will the margin necessarily be positive? Explain why or why not.

3. Consider the alternative of replacing the rental personnel from the business process in Figure below

a. Describe changes that will need to be made to the process documented in Figure above.

b. Would eliminating the rental personnel change the competitive strategy of this company? Is it possible to be a high-value company with no rental personnel? Explain why or why not.

c. Would eliminating the rental personnel necessarily reduce costs? What costs would increase as a result of this change?

4. Consider the alternative of increasing the value delivered by existing rental personnel. The text suggests possibly renting more kinds of equipment or selling items of use to guests who are renting bicycles, but consider other options as well.

a. Describe five ways that you think the existing personnel could increase the value of this business process.

b. For the five alternatives you developed in part a, name and describe criteria for selecting among them.

c. Using your criteria in part b, evaluate the alternatives you identified in part a and select the best one. Explain your selection.

d. Redraw Figure 3-13 for the alternative you selected in part c.

CASE STUDY 3
The Amazon of Innovation
3-8. Based on the facts presented in this case, what do you think is Amazon.com's competitive strategy? Justify your answer.

3-9. Jeff Bezos, CEO of Amazon.com, has stated that the best customer support is none. What does that mean?

3-10. Suppose you work for Amazon or a company that takes innovation as seriously as Amazon does. What do you suppose is the likely reaction to an employee who says to his or her boss, "But, I don't know how to do that!"?

3-11. Using your own words and your own experience, what skills and abilities do you think you need to have to thrive at an organization like Amazon?
3-12. What should UPS and FedEx be doing in response to Amazon.com's interest in drone delivery?