A firm can achieve competitive advantage if it posses ‘capabilities’ that allow it to create not only positive value but as well additional total value than its competitors (Porter, 1 985; Holey et al, 2004). By understanding why a company can create value and whether it can continue to it in the future is a necessary first step in diagnosing firm’s potential for achieving a competitive advantage in the marketplace (Hit al, 2007; Spanks and Lukas, 2001).Therefore, a firm must understand how i TTS products serves customer needs better than potential substitutes; the techno logy f production, distribution and sales; and the business’s costs (Porter, 1985). Strategy Quotes (1) According to Hill & Jones (2001 5 the De. ) maintain that the term &alue chain” refers to the concept that a company is s chain of activities for transforming inputs into outputs with purpose to deliver value to the customers. Pearson (1999) states that a competitive strategy is focused on the topple strategic objective e of a company with purpose to gain competitive advantage.
Hence, if a company wishes to achieve a competitive strategy must encompass every aspect of the business so that every manager and employee knows the objectives of this theatre is and as a result every decision and action is consistent with it and s revs to put in practice (Pearson, 1999). The value chain is therefore a logical way o f looking the overall business activities with purpose to mobiles these various strategic impacts (Porter, 1984).Porter (1985) introduced the concept of value chain as the basic tool for exam Inkling the activities a company performs and their interactions with a view to identify Yin the sources of sustainable competitive advantage. It separates the activities o firm into a sequential stream of activities and is used to analyses and establish he importance Of the different activities in delivering the final product/ service, thereby facilitating the identification of core and encore activities.A simplistic view of this activity organization and operation is given to the follow wing figure. These activities in the value chain are core (primary) and supplements (secondary or support) activities. Companies, primarily have to identify the co re activities that would give them sustainable competitive advantage and then identify the assets and competencies needed to achieve this advantage. Cacao riding Company Performance (1) CRM (1) Free Templates (4)General (1) Marketing Audit (1) Marketing Plan (1) Product Management (2) Start up (1) Strategy Implementation (2) Templates and Toolkits (1) Blob Archive 201 1 (19) September (2) August (1) July (5) (11) Use of Porter’s (1985) Value Chain Framework Models to Analyze your Product Portfolio 2 Product Portfolio Quotes on Business Strategy Ways of Achieving a Cost Leadership Strategy An Introduction to Porter’s Generic Strategies New Toolkit for Start Up & Small Business Four Initiatives to Unlock profitability in the co.
..Considering buying a Franchise? Questions to ask Basic Guidelines for Implementing Strategy o Sanchez and Hen (2004), the value chain activities are systematically interrelated and represent value creation.
Therefore, a business gains compel dative advantage by performing these activities either more cheaply than its compete tutors (low cost strategy), or in a unique way that creates superior customer value a ND commands a price premium (differentiation).Key Terms in Strategy development, implementation,… A Company’s Value Chain A Simplistic Representation About Me Dry.
Antonym Michael am a business consultant specializing in competitive strategy, marketing audit and strategy Visit y websites: http://www. Synergy- consulting-solutions. Com http://www.
Business-templates- u. Com View my complete profile The following figure exhibits Porter’s framework of value chain activities. AC rid Eng to Porter (1985), in the value chain there are t-von. o categories of activities: Sociable 1. Primary activities: are involved with a product’s physical creation; its sale and distribution to buyers, and its service after the sale (comprise inbound logistics, operations, outbound logistics, marketing and sales, and service). These activities are termed ‘primary’ because are the most important ones s they add value to the product or those involved in either producing or selling the product (White, 2004); 2.
Support activities provide the assistance required (Porter, 1 980; White, Followers Join this site with Google Friend Connect Members (3) 2004) for the primary activities to take place (consist of procurement, technology development, HARM, and infrastructure) Figure 2. 13: Porter’s (1985) Value Chain Framework Already a member? Sign in Blob Top Sites Business Source: Porter, M E (1985) “Competitive Advantage A brief summary of the ‘primary activities’ is given in the following table.Cacao to Porter (1980, 1 985) the primary activities of an organization consists of: Inbound Logistics: it involves supplier relationships and refers to all the processes/activities involved in receiving, storing and distributing the raw materials, inputs, components, and parts used in the production process; Operations: are the processes/ activities of manufacturing, assembly, packaging, maintenance of the equipment, and testing of inputs to produce the final pro duct; Outbound Logistics: it relates to storage, processing orders, transport, and distributions of the product to the final consumer;Marketing and Sales: Marketing must make sure that the product is targeted towards the correct customer group. The marketing mix is used to establish an effective strategy; any competitive advantage is clearly communicated to the target group by the use Of the promotional mix. It involves activities like advertising promotions, sales force organization, segmentations, selecting distribution channels, pricing, and managing customer relationships (for either current or potential ones); and Service: All those activities associated with maintaining product performance after the product has been sold.It involves processes/ activities that enhance the value of the product in terms of installation, training, maintenance, repair, warranty, and after sales services. Porters Value Chain Primary Activities: A Summary Inbound Logistics Receipt of inputs (materials) Storage Stock Control Internal Distribution of Inputs Operations Primary Activities Outbound Logistics Transformation of inputs into final product Use of Labor Manufacturing Technologies Distribution of finished goods Stock Control & Inventory Distribution of final product to buyers Sales & Marketing Advertising Promotional Activity Persuading People to buy Service After sales supportOn the other hand, Porter (1980, 1985) defines the support activities (see follow wing table) as: Procurement: This concerns how resources are acquired for a business (e. G.
Sourcing and negotiating with materials suppliers). It occurs in many parts of the organization with purpose to support the main functions to carry out their activities Noon et al. , 1997); Technology Development: Activities concerned with managing information processing and the development and protection of “knowledge” in a business. In addition, it involves technology development to support R&D, process automation, and product design;Human Resource Management (HARM): involves activities in relation to recruitment, training, development, promotion, incentives, and payment of people working for an organization; and Firm Infrastructure: involves the structures and routines of the organization and its management, planning, accounting, finance, and quality control mechanisms.
Porter’s Value Chain Secondary Activities: A Summary Secondary Procurement Pu raising of Resources PU raising of inputs Technology Development Technology to support primary activities & operations infrastructure Leadership Star structure/Management Planning/processesFinance Information Systems Human Resource Management Recruitment Selection Training Reward & Motivation In essence, the value chain disaggregated a company into its strategically reel pant activities in order to understand the behavior of costs for the purpose of con troll and more effective management (Mandarin et al, 1998). The concept is baa seed on the premise that every company is a collection of activities that are perform med to design, produce, market, deliver, and support its product.