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Value Chain

Value Chain

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Published by smh9662
Value Chain Analysis
Value Chain Analysis

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Categories:Types, Business/Law
Published by: smh9662 on Mar 30, 2013
Copyright:Attribution Non-commercial


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The Value Chain
I.Today’s customers face a growing range of choices in the products andservices they can buy.
A.They are making their choice on the basis of their perceptions of quality,service, and value.B.Companies need to understand the determinants of customer value andsatisfaction.1.Customer delivered value is the difference between total customer value and total customer cost.2.Customers will normally choose the offer that maximizes the deliveredvalue.3.Customer satisfaction is the outcome felt by buyers who haveexperienced a company performance that has fulfilled expectations.4.Customers are satisfied when their expectations are met and delightedwhen their expectations are exceeded.5.Satisfied customers remain loyal longer, buy more, are less pricesensitive, and talk favorably about the company.
II.A major challenge for high-performance companies is that of building andmaintaining viable businesses in a rapidly changing marketplace.
A.They must recognize the core elements of the business and how to maintain aviable fit between their stakeholders, processes, resources, and organizationcapabilities and culture.B.Typically, high-performing businesses develop and emphasize cross-functional skills rather than functional skills (overall project management andresults versus functional strengths (best engineers, and so on.).C.They also build their resources into core capabilities that become corecompetencies, distinctive abilities, and competitive advantages.D.This along with a corporate culture of shared experiences, stories, beliefs, andnorms unique to the organization are the keys to their success.
III.To create customer satisfaction, companies must manage their value chainas well as the whole value delivery system in a customer-centered way. Thecompany’s goal is not only to get customers, but even more importantly to retaincustomers.
IV.Value chain analysis, as proposed by Porter, is a way of examining the natureand extent of the synergies that do or do not exist between the internal activitiesof a corporation.
A.The systematic examination of individual value activities can lead to a better understanding of a corporation's strengths and weaknesses.B.Its advantage over other methods of analyzing a firm's internal environment isits ability to visualize a company in terms of strings of product value chains whichcan be tied together in places to achieve economies of scope.
V.Delivering customer value and satisfaction by analyzing the Value chain.The nine value-creating activities:1.Primary Activities
1.Inbound logistics:Handling raw material materials and inventory receivedWarehousing, storageManaging component flow from different suppliersRepresents the beginning of the firm’s conversion of inputsMajor source of direct costsValue opportunitiesReduction in inventory costsLocation of inventoryInventory turnover Speed2.OperationsActivities that transform raw materials into components andfinished productsIncludes manufacturing, assembly, production, processes (EMRoom care)Capital intensiveCore customer productValue opportunitiesTechnology = productivityTQMSpeed of manufactureBetter processes
3.Outbound LogisticsTransfer finished goods to distribution channels or customer Included shipping, warehousing, transportationManage the flow to wholesalers, retailersValue opportunitiesAvailable supplyResponsivenessElectronic links to channels4.Marketing and SalesIdentifying market opportunities and segmentsPositioning productsPricing, promoting (communicating), sellingValue opportunitiesIdentify unique markets and market needsSuperior selling activitiesCustomer relationships5.Service. Warranty, repairs, installations, customer support, customer responseImpacts buying decision and customer loyaltyConsidered part of the product (the bundle of benefits customers purchase)Value opportunitiesResponse timeProblem resolutionRelationshipse-customer service (order confirmations, tracking delivery)
B.Support Activities
1.ProcurementPurchasing inputsBilling, supplier processes,Source of cost advantage

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