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Roxbury Mobile Company (RMC) is developing a new touch-screen smartphone to compete in the cellular phone industry. The company will sell the phones at wholesale prices to cell phone companies, which will in turn sell them in retail stores to the final customer. RMC has undertaken the following activities in its value chain to bring its product to market:Instructions: Identify customer needs (What do Smartphone users want?)Perform market research on competing brandsDesign a prototype of the RMC SmartphoneMarket the new design to cell phone companiesManufacture the RMC SmartphoneProcess orders from cell phone companiesPackage the RMC Smartphone'sDeliver the RMC Smartphone's to the cell phone companiesProvide online assistance to cell phone users for use of the RMC SmartphoneMake design changes to the Smartphone based on customer feedbackDuring the process of product development, production, marketing, distribution, and customer service, RMC has kept track of the following cost drivers:Number of Smartphone's shipped by RMCNumber of design changesNumber of deliveries made to cell phone companiesEngineering hours spent on initial product designHours spent researching competing market brandsCustomer-service hoursNumber of Smartphone orders processedNumber of cell phone companies purchasing the RMC SmartphoneMachine hours required to run the production equipmentNumber of surveys returned and processed from competing Smartphone users1. Identify each value chain activity listed at the beginning of the exercise with one of the following value-chain categories:a. Design of products and processesb. Productionc. Marketingd. Distributione. Customer ServiceCost Item Value Chain Business FunctionPerform market research on competing brandsDesign a prototype of the RMC SmartphoneMarket the new design to cell phone companiesManufacture the RMC SmartphoneProcess orders from cell phone companiesPackage the RMC Smartphone'sDeliver the RMC Smartphone's to the cell phone companiesProvide online assistance to cell phone users for use of the RMC SmartphoneMake design changes to the Smartphone based on customer feedback2. Use the list of preceding cost drivers to find one or more reasonable cost drivers for each of the activities in RMC's value chain.Cost Item Cost DriversNumber of Smartphone's shipped by RMCNumber of design changesNumber of deliveries made to cell phone companiesEngineering hours spent on initial product designHours spent researching competing market brandsCustomer-service hoursNumber of Smartphone orders processedNumber of cell phone companies purchasing the RMC SmartphoneMachine hours required to run the production equipmentNumber of surveys returned and processed from competing Smartphone users
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