Value Chain

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Strategies, Forces, and Tactics
in Competitive Markets
 c. Strategies:
 Differentiation
 Develop products & services which are
different from what the competition offers
 superior attributes
 distinguishing features

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Competitive
Competitive Strategies
Strategies

Competitive Advantage
Lower Cost Differentiation

Broad Cost
Differentiation
Target Leadership

Competitive
Scope
Narrow Cost Focused
Target Focus Differentiation

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Strategies, Forces, and Tactics
in Competitive Markets
 Cost leadership
 based on efficient operations
 based on effective operations
 economies of scale
 become a low cost producer
 market segmentation (niche)
 Focused differentiation
 Market niche
 Cost focus
 narrow market & low cost

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Value Chain Analysis
of Strategic Opportunities
 Definition: Value chain- consists of the major
activities that have been added to the
product during its creation, development or
sale.
 Primary activities : the creation of product or
service
 inbound logistics - order entry data collection,
obtain raw materials, subassemblies
 Operations - order processing, MRP;
transformation of inputs to finished goods

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Value Chain Analysis
of Strategic Opportunities
 Primary activities : the creation of
product or service
 Outbound logistics - distribution & sales
data; storing products,
 Marketing sales - promotions, discounting;
establishing a customer need
 Service activities - calls, returns, product
rotation and maintenance

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Value
Value Chain
Chain with
with Typical
Typical Strategic
Strategic IS
IS
Mapped
Mapped onto
onto itit

EDI-Based Computer- Automated Expert Telemaintenance

Purchasing Integrated Ordering Systems for Expert
System Mftg. System Salespeople Systems

Inbound Outbound Marketing

Operations Service
Logistics Logistics and Sales

Upstream Chains Downstream Chains

of Suppliers of Customers

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Value Chain Analysis
of Strategic Opportunities
 Support activities: The required
infrastructure
 Org's infrastructure
 Human resources
 Technology
 Procurement

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Value Chain Analysis
of Strategic Opportunities
 Z-1992 fig 5.5 & 5.6

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Strategic Systems
in Operations
 A. Manufacturing
 CIM
 MRP II

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5.6 Strategic Systems
in Operations
 Z Figure 5.7 p166

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 Strategic Systems in
Operations: Manufacturing
System Benefit
CIM Control of entire process
FMS Units of 1
CAD / CAM Configuration control for
each customer
MRP II Reduced inventory costs
Reduced cycle time

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Strategies for CIM and BRP
 Fjermestad & Chakrabarti, 1993

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