Value Chain

Strategies, Forces, and

Tactics in Competitive
c. Strategies:
Markets

Differentiation
Develop products & services which
are different from what the
competition offers
superior attributes
distinguishing features

Competitive
Competitive Strategies
Strategies
Competitive Advantage
Lower Cost

Differentiation

Broad
Target

Cost
Leadership

Differentiation

Narrow
Target

Cost
Focus

Focused
Differentiation

Competitive
Scope

Strategies, Forces, and

Tactics in Competitive
Cost leadership
Markets
based on efficient operations

based on effective operations

economies of scale

Focused differentiation

become a low cost producer

market segmentation (niche)

Market niche

Cost focus

narrow market & low cost

Value Chain Analysis

of Strategic Opportunities

Definition: Value chain- consists of the

major activities that have been added to
the product during its creation,
development or sale.
Primary activities : the creation of
product or service

inbound logistics - order entry data collection,

obtain raw materials, subassemblies
Operations - order processing, MRP;
transformation of inputs to finished goods

Value Chain Analysis

of Strategic Opportunities

Primary activities : the creation of

product or service

Outbound logistics - distribution & sales

data; storing products,
Marketing sales - promotions,
discounting; establishing a customer
need
Service activities - calls, returns, product
rotation and maintenance
9

Value
Value Chain
Chain with
withTypical
Typical Strategic
Strategic IS
IS
Mapped
Mapped onto
onto itit

EDI-Based
Purchasing
System

ComputerIntegrated
Mftg.

Inbound
Logistics

Upstream Chains
of Suppliers

Operations

Automated
Ordering
System
Outbound
Logistics

Expert
Systems for
Salespeople
Marketing
and Sales

Telemaintenance
Expert
Systems
Service

Downstream Chains
of Customers

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Value Chain Analysis

of Strategic Opportunities

Support activities: The required

infrastructure

Org's infrastructure
Human resources
Technology
Procurement

12

Value Chain Analysis

of Strategic Opportunities

Z-1992 fig 5.5 & 5.6

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Strategic Systems
in Operations

A. Manufacturing

CIM
MRP II

15

5.6 Strategic Systems

in Operations

Z Figure 5.7 p166

16

Strategic Systems in
Operations:
System
Benefit
Manufacturing
CIM
FMS
CAD / CAM
MRP II

Control of entire process

Units of 1
Configuration control for
each customer
Reduced inventory costs
Reduced cycle time

17

Strategies for CIM and BRP

Fjermestad & Chakrabarti, 1993

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