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TABLE OF CONTENTS
VALUE CHAIN ANALYSIS REPORT
A. Introcuction - What is Value Chain Analysis .................................................................. 3
B. Primary Activities ........................................................................................................... 4
C. Secondary/Support Activities ........................................................................................ 4
D. Cost Advantages............................................................................................................. 5
E. Differentiation................................................................................................................ 5
F. Technology ..................................................................................................................... 6
G. Linkages.......................................................................................................................... 6
H. Outsourcing.................................................................................................................... 6
CONCLUSIONS ................................................................................................................ 6
REFERENCES ................................................................................................................... 7
B. PRIMARY ACTIVITIES
Primary activities aim to achieve profit margin to the market and can be classified into the
following:
-
Operations: activities that transform the inputs into finished product and services
including production process, development activities, testing, packaging,
maintenance, and so on.
Marketing and Sales: These activities include the advertising, channel selection,
product promotion, selling, product pricing, retail management, etc. Marketing mix
can be used to identify customer needs by determining price, product, promotion
and place of our target market.
Services: customer support organizations provide after the products and/or services
have been sold. These are guarantees, repair services, installation, updating,
trainings, etc.
C. SECONDARY/SUPPORT ACTIVITIES
These are the activities that the organization performs to assist the primary activities.
-
Infrastructure: This includes the planning management to meet the strategic plan
and the objectives.
Procurement: This is the purchasing activity of the inputs to transform these into
finished products or services.
4
D. COST ADVANTAGES
Cost advantages through value chain can be achieved via reducing cost in activities
individually or globally changing, improving and/or restructuring the value chain.
Thus, to assess this advantages a cost analysis needs to be done by assigning cots to the
different activities in the chain.
According to Porter there are ten general costs driving value chain activities:
-
Economies of scale
Learning
Capacity utilization
Linkages among activities
Interrelationships among business units
Degree of vertical integration
Timing of market entry
Firm's policy of cost or differentiation
Geographic location
Institutional factors (regulation, union activity, taxes, etc.)
Porter suggests that success is embodied in the way organizations manage these drivers.
The alternative way is restructuring the value chain which implies changes such a new
production processes, new distribution channels, or a different sales approach.
E. DIFFERENTIATION
In most of the cases differentiation comes from uniqueness and serves to distinguish and
stand out among others. This differentiation can originate in any area within in the value
chain by either changing/improving individual activities or by restructuration of the chain.
Porters drivers of differentiation are:
-
Usually, differentiation incurs costs, therefore, risk must be analysed to ensure pay back of
the investment.
5
F. TECHNOLOGY
Technology can have a great impact on value chains. Directly or indirectly, it may affect or
influence all areas and/or activities within the chain when it comes to creating value.
Therefore, it must to be taken into consideration.
For instance, transportation and communication can considerable are crucial to inbound
and outbound logistics, as well as for operations are maintenance and processes. Marketing,
for example, completely relays on technology as means of communication.
Thus, technology has a massive impact that can lead to competitive advantage.
CONCLUSION
Value chain analysis is an incredible useful tool that help firms to add the greatest possible
value within their products and services and to rich their maximum potential as
organizations.
REFERENCES
1. http://www.netmba.com/strategy/value-chain/
2. http://www.marketingteacher.com/Lessons/lesson_value_chain.htm
3. http://www.tutor2u.net/business/strategy/value_chain_analisys.htm