Value Chain Essay

2828 words - 12 pages

VALUE CHAIN – CRITIQUE/FIRM LEVEL ANALYSIS

INDIVIDUAL ASSIGNMENT – UNIVERSITY OF BALLARAT

CHINTHAKA ARIYAPALA – ID 30100162

Brief Content

Topic Page

1. INTRODUCTION...………………………………………………………………………….. 3
2. VALUE CHAIN FRAMEWORK-CRITIQUE…………………………………………………….. 3
3. MAIN ASPECT OF VALUE CHAIN ANALYSIS…………………………………………………. 3
4. PRIMARY ACTIVITIES…………………………………………………………………………………. 4
5. SUPPORT ACTIVITIES………………………………………………………………….…………. 5
6. LIMITATION OF VALUE CHAIN ANALYSIS………………………………………………………. 7
7. COMPETENCIES……………………………………………………………………………… 8
8. INTERNAL ANALYSIS THROUGH SWOT ANALYSIS……………………………………… 8
9. VALUE CHAIN ANALYSIS……………………………………………………………………….. ...view middle of the document...

Therein, competitive advantage of an organization lies in its ability to perform crucial activities along the value chain better than its competitors.
The value chain framework of Porter (1990) is “an interdependent system or network of activities, connected by linkages” (p. 41). When the system is managed carefully, the linkages can be a vital source of competitive advantage (Pathania-Jain, 2001). The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links the value of the organizations’ activities with its main functional parts. Then the assessment of the contribution of each part in the overall added value of the business is made (Lynch, 2003). In order to conduct the value chain analysis, the company is split into primary and support activities (Figure 1). Primary activities are those that are related with production, while support activities are those that provide the background necessary for the effectiveness and efficiency of the firm, such as human resource management. The primary and secondary activities of the firm are discussed in detail below.
Primary activities
The primary activities (Porter, 1985) of the company include the following:
• Inbound logistics

These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm.
• Operations
These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc.
• Outbound logistics
These are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel.
• Marketing and sales
This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firm’s products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products.
• Service
There is often a need to provide services like pre-installation or after-sales service before or after the sale of the product or service.

Support activities
The support activities of a company include the following:
• Procurement
This function is responsible for purchasing the materials that are necessary for the company’s operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices.
• Human Resource Management
This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage.
• Technology Development
This is an...

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