SM Chape3 - Strategic Management Chapter 3 Analyzing the...

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Strategic Management Chapter 3 – Analyzing the Internal Environment of the Firm Value-Chain Analysis Value-Chain analysis views the organization as a sequential process of value-creating activities. It is based on the simple notion that a firm engages in a series of activities that combine the various necessary inputs to create the product offering that the firm brings to the marketplace. The value-chain analysis provides the foundation for understanding the building blocks of competitive advantage. In competitive terms, value is the amount that buyers are willing to pay for what a firm provides them. In reality, value can be measured by total revenue, a reflection of the price a firm’s product commands and the quantity it can sell. Porter described two different categories of activities. First, five primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) contribute to the physical creating of the product or service, its sale and transfer to the buyer, and its service after the sale. Second, support activiites (procurement, technology development, human resource management, and firm infrastructure) either add value by themselves or add value through important relationships with both primary activities and other support activities. Primary Activities Five generic categories of primary activities are involved in competing in any industry. Inbound Logistics Inbound logistics are primarily associated with receiving, storing, and distributing inputs to the product. They include material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers. Operations Operations concern all activities associated with transforming inputs into the final product form, including machining, packaging, assembly, testing, printing and facility operations. Outbound Logistics The activities of outbound logistics are associated with collecting, storing, and distributing the product or service to buyers. They include finished goods, warehousing, material handling, delivery vehicle operation, order processing, and scheduling. Marketing and Sales
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This note was uploaded on 09/22/2010 for the course SM ADMN4106 taught by Professor Stevenmoore during the Spring '10 term at AIB College of Business.

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SM Chape3 - Strategic Management Chapter 3 Analyzing the...

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