Skip to main content

VALUE CHAIN ANALYSIS IN BUSINESS


                                    VALUE CHAIN ANALYSIS
Value chain analisis describes the activities of a business and relates them to an analysis of competitive strength of the business. It was developed by Michael Porter. He suggested that they be grouped into two: Primary activities and support services (secondary activities).
1) Primary Activities - those that are directly concerned with creating and delivering a product
                                                                                                                                                     a) Inbound logistics: Here the raw materials or the goods are received from the supplier. They are stored until when they are needed.                                                         b) Operations: This is where the resources and inputs are converted to output. The goods are manufactured or assembled into finished products.                              c) Outbound logistics:  here the main concern is to deliver the finished goods to the market. They can be sent along the supply chain to wholesalers and retailers or directly to the final consumer.                                                                                      d) Marketing and sales: Essentially an information activity - informing buyers and consumers about products and services (benefits, use, price etc.).This area focuses mainly on communication and the promotion mix. Service: All those activities associated with maintaining product performance after the product has been sold. This includes after sales service such as installation and complaints handling.

(2) Support Activities/secondary activities- which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management).

                                                                                                                                                         a) Procurement : This is mainly concerned with how to acquire resources for the business. Resources like raw materials are purchased, ensuring that they are of the highest quality and the best price.                                                                                   b) Technology development: Activities concerned with managing information processing and the development and protection of "knowledge" in a business it is a source of competitive advantage. Companies need to innovate in order to reduce costs and to protect and sustain competitive advantage. Some activities are like use of new invented machines and Electronic marketing.                                        c) Human resource management: The employees are the most important recourses in a business though they are the most expensive. The main activities it’s concerned with are recruiting, developing, motivating and rewarding the workforce of a business. The mission and the objectives of the organization would be the driving force behind the Human Resource Management strategy.                             d) Infrastructure: this activity is driven by corporate or strategic planning.  It’s mainly concerned with a wide range of support systems and functions such as finance, planning, quality control and general senior management.

Steps in Value Chain Analysis
Value chain analysis can be broken down into a three sequential steps:
(1) Break down an organization into its key activities under each of the major headings in the model.
(2) Assess the potential for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage.
(3) Determine strategies built around focusing on activities where competitive advantage can be sustained.

Reference
http://tutor2u.net/business/strategy/value_chain_analysis.htm






KCA UNIVERSITY

BACHELOR OF COMMERCE

VALUE CHAIN ANALISIS

CODE: CAM 204

CYNTHIA JEPCHUMBA LETING

REG NO: 07/02651

TO; NORA

DATE: 31.05.2011

Comments

Post a Comment

Popular posts from this blog

Tools and Techniques of Financial Statement Analysis:

Tools and Techniques of Financial Statement Analysis: Following are the most important tools and techniques of financial statement analysis: Horizontal and Vertical Analysis Ratios Analysis 1. Horizontal and Vertical Analysis : Horizontal Analysis or Trend Analysis : Comparison of two or more year's financial data is known as horizontal analysis , or trend analysis. Horizontal analysis is facilitated by showing changes between years in both dollar and percentage form. Horizontal analysis is facilitated by showing changes between years in both dollar and percentage form as has been done in the example below. Showing changes in dollar form helps the analyst focus on key factors t hat have affected profitability or financial position. Observe in the example that sales for 2002 were up $4 million over 2001, but that this increase in sales was more than negated by a $4.5million increase in cost of goods sold. Showing changes between years in perce...
Post a Comment
Read more

WHEN YOUR CHILD FALLS ILL IN SCHOOL

When your child falls ill in school… By Harold Ayodo When a student becomes ill or suffers an injury, which between the parent and school is responsible for ensuring they get proper treatment and pays medical bill? Even though all students get sick at some point, few parents and guardians give much thought to whether their children can access quality medical care, especially during an emergency, in school. Some realise they should have been more concerned about their child’s medical welfare when it is too late. This was true in the case of Mrs Karin Rapp, the programme director of the Youth Sponsorship Programme , an organisation that offers bursaries and support to needy, bright students in public secondary schools . She was confident that the medical needs of the students were covered by medical fees, one of the items in tuition fees. Besides, the Government allocates Sh300 to every student for medical costs through the subsidised secondary education programme. Man...
Post a Comment
Read more