Leading-edge companies looking for ways to offset these forces are now beginning to adopt a concept potentially powerful enough to blunt the effects of economic power shifts - the Integrated Value Chain. This concept will have a major impact, allowing companies, and ultimately customers, to benefit from reduced inventories, cost savings, improved customer service, and tighter links with business partners and suppliers. These value chains, and the organizations that comprise them, will constitute powerful competitive entities with compelling characteristics. They will be: -Value leaders, -Global in scope and/or reach, - Technology/ Web-linked, -Fiercely competitive on cost, service, speed, and quality, -Thought leaders, -Trendsetters in service and delivery.
In today's fast-changing competitive environment, strategy is no longer a matter of positioning a fixed set of activities along hat old industrial model, the value chain. Successful companies increasingly do not just add value, they reinvent it. The key strategic task is to reconfigure roles and relationships among a constellation of actors - suppliers, partners, customers - in order to mobilize the creation of value by new combinations of players.
The relevant level for constructing a value chain is a firm's activities in a particular industry (the business unit). An industry- or sector-wide value chain is too broad, because it may obscure important sources of competitive advantage. Though firms in the same industry may have similar chains the value chains of competitors often differ. People Express and United Airlines both compete in the airline industry, for example, but they have very different value chains embodying significant differences in boarding gate operations, crew policies, and aircraft operations. Differences amigo competitor value chains are a key source of competitive advantage.
A very large-scale business process that is initiated by a customer request, or by the decision of the company to enter a new line of business, and results in the delivery of a process or service to a customer. A value chain includes everything that contributes to the output. By adding up all of the costs of each activity in a value chain, and subtracting the total from the sale price, an organization can determine the profit margin on the value chain. Most organizations support from 3 to 15 value chains
The value chain can be used to understand differentiation in a graphical way at a firm level. These graphics can then be used to visualize a company, highlight strengths or weaknesses, compare strengths or weaknesses, or identify matches for strategic partnerships. This latter example is particularly important to understand if you’re a program manager responsible for M&A activities – the Value Chain fit will act as a constant memory aid guiding your decisions when running and structuring the program of work.
The first step in value chain management is researching the products your customers want. [...] Once a new product has been identified or an existing product upgraded to meet anticipated demand, that item is tested, refined and sent on for production. [...] Where your product is manufactured can have a significant impact on quality, cost and value. [...] Marketing and Sales [...] Where you warehouse and how you distribute your product is a critical link in the value chain. Transportation, material handling, packaging, communications and information systems need to be in place to get the product to your customers. [...] Getting the product to your customers means training your employees to know everything about it, advising customers how to use the product, diagnosing and troubleshooting, and providing friendly service. This final link in the supply chain is refined as needed and is used by senior management to gauge customer behavior
The concept of a value chain first emerged as a business management model, and was popularized by Harvard Business School professor and company strategy expert Michael Porter in 1985. The value chain is the series of primary and support activities that ensures that when the product or service reaches the market, potential customers will clearly understand what the product or service accomplishes. [...] Primary activities include: -Inbound logistics, -Operations, -Outbound logistics, -Marketing and sales, -Services. Support activities include: -Procurement, -Technology development, -Human resource management, -Firm infrastructure.
Value Chain - Defined as a sequence of highly structured organizational processes and partners to create, produce and deliver a product or service satisfying customer and market demands form a company specific perspective.
A value chain can be defined as all the firms that buy and sell from each other in order to supply a particular set of products or services to final consumers. A value chain includes designers, producers, processors, input suppliers, wholesalers, and retailers and is defined by a particular finished product or service (wood furniture, dried tomatoes, clothing production, legal consulting, etc.). [...] use selection criteria to choose promising value chains. These criteria could include: -Unmet demand in the market for particular products, -Potential for increase in household incomes, -Number of MSMEs in the value chain, -Potential for employment generation, -Existence of linkages conducive to inter-firm collaboration, -Potential for positive coordination and synergy with donors and government, -Representation of women in the value chain.
The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation.