M110+11+Session+4+post-class

M110+11+Session+4+post-class - Value Chain System Firms are...

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Value Chain System • Firms are collections of discrete activities, in which competitive advantage resides. “Competitive advantage cannot be understood by looking at the firm as whole.” • “The value chain disaggregates a firm into its trategically relevant activities in order to understand the strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation .”
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Subdividing the Value Chain Firm Infrastructure Human Resource Management Technology Development Service Marketing Outbound Logistics Operations Inbound Logistics Procurement • What is actually • Benchmarking • Re-engineering Sales Sales Market Research Procurement Technical Literature Force Operations Force Administration Advertising Marketing Management
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Value Chain Analysis A tool for the examination of the strategically relevant activities of a business in order to understand the behavior of costs and the potential sources of differentiation . Three objectives : 1. What are the sources of competitive advantage? What activities are being done ow they do each activity (implications for benchmarking and reengineering) How they do each activity (implications for benchmarking and reengineering) Links among activities (trade-off, complements, coordination…) 2. How is the business achieving its margins? Margin = total value (revenues) - costs of performing the activities Cost accumulation versus value enhancement for primary and supporting activities Primary activities – directly involved in the creation of value
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M110+11+Session+4+post-class - Value Chain System Firms are...

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