Discuss how adopting a value chain perspective reveals advantages of adopting an REA approach to information system development
Decision-makers need to look at far more than the internal operations and functions of the organization. Value chain analysis distinguishes between primary activities–those that create value–and support activities–those that assist achievement of the primary activities. Through applying the analysis, an organization is able to look beyond itself and maximize its ability to create value by, for example, incorporating the needs of its customers within its products, or the flexibility of its suppliers in scheduling its production.
It would be impossible to incorporate much of the value chain activities within a traditional information system. Those organizations that have applied value chain analysis have generally done so outside the accounting information system, providing such information separately to the decision-makers. Frequently, this would involve the establishment of other distinct information systems, such as marketing information systems, with all the resulting problems inherent in operating multiple information systems, including data duplication, data redundancy, and data inconsistency. It is fairly obvious that the adoption of a single information system framework that encompassed all this information, such as one based upon the REA approach, would be preferable.
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