...The article focuses on the main aspects of Value chain analysis. The activities entailed in the framework are discussed in detail, with respect to competitive strategies and value to the customer. The article includes tips for students and analysts on how to write a good Value chain analysis for a firm. Moreover, sources of findings information for value chain analysis have been discussed. The limitations of Value Chain analysis as a model have also been discussed. Introduction The value chain approach was developed by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage in the business arena of the 21st C. All organisations consist of activities that link together to develop the value of the business, and together these activities form the organisation’s value chain. Such activities may include purchasing activities, manufacturing the products, distribution and marketing of the company’s products and activities (Lynch, 2003). The value chain framework has been used as a powerful analysis tool for the strategic planning of an organisation for nearly two decades. The aim of the value chain framework is to maximise value creation while minimising costs (www.wikipedia.org). Main aspects of Value Chain AnalysisValue chain analysis is a powerful tool for managers to identify...
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...Papers on Value chain analysis; Reports on Different Companies The article focuses on the main aspects of Value chain analysis. The activities entailed in the framework are discussed in detail, with respect to competitive strategies and value to the customer. The article includes tips for students and analysts on how to write a good Value chain analysis for a firm. Moreover, sources of findings information for value chain analysis have been discussed. The limitations of Value Chain analysis as a model have also been discussed. Introduction The value chain approach was developed by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage in the business arena of the 21st C. All organisations consist of activities that link together to develop the value of the business, and together these activities form the organisation’s value chain. Such activities may include purchasing activities, manufacturing the products, distribution and marketing of the company’s products and activities (Lynch, 2003). The value chain framework has been used as a powerful analysis tool for the strategic planning of an organisation for nearly two decades. The aim of the value chain framework is to maximise value creation while minimising costs (www.wikipedia.org). Main aspects of Value Chain Analysis ...
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...comprise the task of evaluating a company's resources and competitive position? A. What are the company's most profitable geographic market segments? B. How well is the company's present strategy working? C. Are the company's prices and costs competitive? D. Is the company competitively stronger or weaker than key rivals? E. What strategic issues and problems merit front-burner managerial attention? Which of the following is not a component of evaluating a company's resources and competitive position? A. Evaluating how well the present strategy is working B. Scanning the environment to determine a company's best and most profitable customers C. Assessing whether the company's costs and prices are competitive D. Evaluating whether the company is competitively stronger or weaker than key rivals E. Pinpointing what strategic issues and problems merit front-burner managerial attention The spotlight in analyzing a company's resources, internal circumstances, and competitiveness includes such questions/concerns as Awhether the company's present strategy is better than the strategies of its closest rivals based on such . performance measures as earnings per share, ROE, dividend payout ratio, and average annual increase in the common stock price. B. whether the company's key success factors are more dominant than the key success factors of close rivals. C. whether the company has the industry's most efficient and effective value chain. D. what are the company's resource strengths and weaknesses...
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...YOUR RESULTS: ================================================================ CORRECT 1: Which one of the following is not helpful in identifying the components of a single-business company's strategy? a. Initiatives to build competitive advantage b. Efforts to expand or narrow geographic coverage c. The company's resource strengths and weaknesses d. The company's key functional strategies Your Answer: The company's resource strengths and weaknesses CORRECT 2: SWOT analysis a. provides the basis for crafting a strategy that capitalizes on the company's strengths, overcomes its weaknesses, aims squarely at capturing the company's best opportunities, and defends against competitive and environmental threats b. provides a quick overview of where on the scale from "alarmingly weak" to "exceptionally strong" the attractiveness of the company's overall business situation ranks. c. helps provide a basis for matching the company's strategy to its internal resource capabilities and its external opportunities and threats. d. helps identify a company's core competencies and competitive capabilities and the seriousness of its resource weaknesses and competitive deficiencies. Your Answer: All of these. CORRECT 3: A core competence a. is a more durable company resource than a "distinctive...
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...1. “Value chain analysis (VCA) is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation.” 2. “Value chain represents the internal activities a firm engages in when transforming inputs into outputs.” Understanding the tool VCA is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage. In other words, by looking into internal activities, the analysis reveals where a firm’s competitive advantages or disadvantages are. The firm that competes through differentiation advantage will try to perform its activities better than competitors would do. If it competes through cost advantage, it will try to perform internal activities at lower costs than competitors would do. When a company is capable of producing goods at lower costs than the market price or to provide superior products, it earns profits. M. Porter introduced the generic value chain model in 1985. Value chain represents all the internal activities a firm engages in to produce goods and services. VC is formed of primary activities that add value to the final product directly and support activities that add value indirectly. Below you can see the Porter’s VC model. Primary Activities | ...
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...TITLE Value Chain Analysis for Assessing Competitive Advantage CREDITS This statement was approved for issuance as a Statement on Management Accounting by the Management Accounting Committee (MAC) of the Institute of Management Accountants (IMA). IMA appreciates the support of The Society of Management Accountants of Canada (SMAC) in helping create this SMA and extends appreciation to Joseph G. San Miguel, of the Naval Postgraduate School, who drafted the manuscript. Published by Institute of Management Accountants 10 Paragon Drive Montvale, NJ 07645-1760 www.imanet.org Special thanks are due to Randoif Holst, SMAC Manager, Management Accounting Guidelines, for his continuing project supervision and to the members of the focus group (including MAC members Dennis Daly and Thomas Huff) for contributing to the improvement of the final document. Copyright © 1996 Institute of Management Accountants All rights reserved Statements on Management Accounting PRACTICE OF MANAGEMENT ACCOUNTING Value Chain Analysis for Assessing Competitive Advantage TABLE OF CONTENTS I. II. III. IV. Rationale . . . . . . . . . . . . . . . . . . . . . . . 1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Value Chain Defined . . . . . . . . . . . . .1 Competitive Advantage and Customer Value . . . . . . . . . . . . . . . . . . .2 V. The Role of the Management Accountant . . . . . . . . . . . . . . . . . . . . . . .4 VI. The Value Chain Approach...
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...1(d).Value Chain Analysis: A Way to profit improvement & cost Reduction Learning Objective 1. how to identify the value added activity 2. how to rectify the non –value added activity 3. application in profit planning & cost reduction INTRODUCTION Competitive advantage for a company means not just matching or surpassing their competitors, discovering what the customers want and then profitably satisfying, and even exceeding their expectations. As barriers to inter-regional and international trade are diminishing and as access to goods and services are growing, customers can locate after identification and «the best of what they want, at an acceptable price, wherever it is in the world. Under growing competition and, hence, rising customer expectations, a company's penalty for complacency becomes even greater. A strategic tool to measure the importance of the customer's perceived value is value chain analysis. By enabling companies to determine the strategic advantages and disadvantages of activities and value-creating processes in the market place, value chain analysis becomes essential for assessing competitive advantage. Value analysis or value engineering is one of the most widely used cost reduction techniques. It can be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through ...
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...Rubric for Case Analysis: As you are probably aware, case analysis is the most essential part of a business analyst’s toolbox. As such, it is of paramount importance that you learn how to do case analysis thoroughly. As with any analysis we follow a certain framework when we conduct case analysis. Please understand that the framework that we are going to follow in this class is one of many and there is disagreement among the academic and professional communities as to which one of these frameworks is the best. That said, in my humble opinion, the framework that follows is a good start to the case analysis process. What we gather from the initial analysis can then be used to direct functional departments (finance, supply chain, marketing etc.) to gather relevant data, which can be used to do further analysis. The initial analysis should follow the following process: ------------------------------------------------- Part 1 Points assigned: 15 (financial + external+ internal) A) Financial Analysis: Look for both accounting and economic measure of performance in the case. If any such indicators are not given in the case or you can’t calculate these indicators from the data provided in the case (i.e. profit-loss statement, balance sheet, and relevant data associated with WACC calculation etc.), skip this part of the analysis. However, if such data is present please go ahead and calculate relevant financial ratio and economic indicators of performance as instructed in the...
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...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……………………………………………………………………….. 9 10. CONCLUTION…………………………………………………………………………………….……. 11 11. REFERENCES……………………………………………………………………………….…………. 13 Introduction The value chain approach was introduced by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilized to develop an organization’s sustainable competitive advantage in the business arena of the 21st C. All organizations consist of activities that link together to develop the value of the business, and together these activities form the organization’s value chain. Such activities may include purchasing activities, manufacturing the products, distribution and marketing of the company’s products and activities (Lynch...
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... Dell Inc. Competitive forces The Competitive forces has five forces which are threat of new competition; threat of substitute products or services; bargaining power of customers or buyers; bargaining power of supplier; and intensity of competitive rivalry. I. Threat of new competition: In the other word, it is the threat of new entrants. For the threat of new entrants, based on the Porter's five forces, a model for industry analysis, " Barriers to entry are more than the normal equilibrium adjustments that markets typically make." (Porter's Five Forces). If a company wants to enter a new market, it should consider about the following factors in the industry which are Government policy, economies of scale, capital requirements, brand identity, absolute cost advantages and Industry profitability etc. II. Threat of substitute products or services: According to Wikipedia, " The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Note that this should not be confused with competitors' similar products but entirely different ones instead." (Porter five forces analysis, 2009). Many factors such as switching costs, buyer inclination to substitute, price performance, and trade- off of substitutes should be considered by a company. III. bargaining power of customers or buyers: based on Wikipedia"The bargaining power of customers is also described as the market of outputs: the ability...
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...How to write a Good Value Chain Analysis The ability of a company to understand its own capabilities and the needs of the customers is crucial for a competitive strategy to be successful. The profitability of a firm depends to a large extent on how effectively it manages the various activities in the value chain, such that the price that the customer is willing to pay for the company’s products and services exceeds the relative costs of the value chain activities. It is important to bear in mind that while the value chain analysis may appear as simple in theory, it is quite time-consuming in practice. The logic and validity of the proven technique of value chain analysis has been rigorously tested, therefore, it does not require the user to have the same in-depth knowledge as the originator of the model (Macmillan et al, 2000). The first step in conducting the value chain analysis is to break down the key activities of the company according to the activities entailed in the framework. The next step is to assess the potential for adding value through the means of cost advantage or differentiation. Finally, it is imperative for the analyst to determine strategies that focus on those activities that would enable the company to attain sustainable competitive advantage. It is important for analysts to remember to use the value chain as a simple checklist to analyse each activity in the business with some depth (Pearson, 1999). The value chain should be analysed with the core competence...
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...VALUE CHAIN ANALYSIS A) Discussion of the core elements of a value chain. (8 marks) B) Explanation of why an understanding of these elements is so important in managing costs and gaining or sustaining competitive advantage. Establish all important linkages in your answer. (12 marks) The value chain analysis is a useful tool for defining a firm’s core competencies and the activities in which it can pursue a competitive advantage. The core elements of a value chain analysis are the primary and secondary activities and cost. Companies use these primary and support activities as "building blocks" to create a valuable product or service. The Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. The primary activity and cost is where the value for customers and their purchasing decisions are directly influence and created by these functions. These activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Inbound logistics: For the production and development activities, organizations need inputs as goods which are received from the suppliers. Inbound logistics refer to all the activities related to receive goods from the suppliers, decision about the transportation scheduling, storing the goods as inventory, managing the inventory, and make the inputs ready to use for the production of end products. Operations: Operation is the process of transforming input activities...
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...IDENTIFYING COMPETITIVE ADVANTAGES Video: Panera Bread Cohesion Case: Competitive Advantage:Business Dilemma To survive and thrive, an organization must create a competitive advantage. A competitive advantage is a product or service that an organization's customers place a greater value on than similar offerings from a competitor. Unfortunately, competitive advantages are typically temporary because competitors often seek ways to duplicate the competitive advantage. In turn, organizations must develop a strategy based on a new competitive advantage. When an organization is the first to market with a competitive advantage, it gains a first-mover advantage. The first-mover advantage occurs when an organization can significantly impact its market share by being first to market with a competitive advantage. FedEx created a first-mover advantage by creating its customer self-service software, which allows people and organizations to request parcel pickups, print mailing slips, and track parcels online. Other parcel delivery companies quickly began creating their own online services. Today, customer self-service on the Internet is a standard for doing business in the parcel delivery business. Page 14 As organizations develop their competitive advantages, they must pay close attention to their competition through environmental scanning. Environmental scanning is the acquisition and analysis of events and trends in the environment external to an organization. Information technology...
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...SMR001 rP os t MIT Massachusetts Institute of Technology Summer 1985 Designing Global Strategies: Comparative and Competitive Value-Added Chains No Bruce Kogut tC op yo Volume 26 Number 4 Do Reprint 2642 This document is authorized for use only by Fernando Juarez until October 2010. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860. PDFs I Reprints I Permission to Copy I Back Issues Electronic copies of MIT Sloan Management Review articles as well as traditional reprints can be purchased on our web site: www.mit-smr.com or you may order through our Business Service Center (9 a.m.-5 p.m. ET) at the phone numbers listed below. op yo To reproduce or transmit one or more MIT Sloan Management Review articles by electronic or mechanical means (including photocopying or archiving in any information storage or retrieval system) requires written permission. To request permission, use our web site (www.mit-smr.com), call or e-mail: rP os t MITSloan Management Review Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 e-mail:smrpermissions@mit.edu To request a free copy of our reprint catalog or order a back issue of MIT Sloan Management Review, please contact: MIT Sloan Management Review 77 Massachusetts Ave, E60-100 Cambridge, MA 02139-4307 Do No tC Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 Fax:...
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...and industries in which organization is involved. 2. Organization strategy is the strategy that concerned with your business creating a good value in eyes of your customers and making a strong position in the market. It describes the long term outlook for business and defining new technology and economic conditions. It can also be defined as knowledge of the goals, the uncertainty of event and need to take into consideration or actual behavior of others. 2. Describe the types of strategy in terms of organizational planning and development? Ans: : The types of strategy in terms of organizational planning development are following: * Corporate strategy: Corporate strategy is term which is used to combine or acquire with some other company. * Operational strategy: It is the term used by the area manager’s to give some instructions to the managers to sort out the problems within the organization. * Business strategy: it is the term used to enlarge our business ion the market by introducing new products and by god management skills. * Price leadership: It is to give good price to customers and a quality products. * Restructuring: This is to add something new to the business and to control some issues which are identify by the surveyors or by the feedback of the customers. * Competitive advantage: This term is to compete with our rivals in the market by different strategy and by good price. This is also the option to...
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