Value Chain & Competitive Advantage.(FINAL)

8/12/2019 Value Chain & Competitive Advantage.(FINAL)

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INTRODUCTION

Competitive advantage for a company means not just matching or surpassing what competitors

can do, but discovering what customers want and then profitably satisfying, and even exceeding,

their expectations. As barriers to interregional and international trade have diminished and as

access to goods and services has grown,customers can locate and acquire the best of what they

want, at an acceptable price, wherever it is in the world. Under growing competition and, hence,

rising customer expectations, a companys penalty for complacency becomes even greater. A

strategic tool to measure the importance of the customers perceived value is value chain

analysis. By enabling companies to determine the strategic advantages and disadvantages of their

activities and value-creating processes in the marketplace, value chain analysis becomes essential

for assessing competitive advantage.

Competitive advantage stems from the many discrete activies a firm performs in designing,

producing, marketing, delivering, and supporting its production. Each of these activities can

contribute to a firms relative cost position and create a basis for differentation. A systematic

way of examining all the activities a firm performs and how they interact is necessary for

analyzing the sources of competitive advantage. The value chain as the basic tool for doing so.

The value chain disaggregates a firm into its strategically relevant activies in order to understand

the behavior of costs and existing and potential sources of differentiation. A firm gains

competitive advantage by performing these strategically important activies more cheaply and

better than its competitiors. Gaining and sustaining competitive advantage depends on

understanding not only a firms value chain but how the firm fits in the overall value system.

One important difference is that a firms value chain may differ in competitive scope from that of

its competitors, representing a potential source of competitive advantage.


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The Value Chain

The term Value Chain was used by Michael Porter in his book "Competitive

Advantage:Creating and Sustaining superior Performance" (1985). The value chain analysisdescribes the activities the organization performsanced links them to the organizations

competitive position.

Value chain analysis describes the activities with in and around an organization, and relates them

to an analysis of the competitive strength of the organization.Therefore,it evaluates which value

each particular activity adds to the organizations products or services. This idea was built upon

the insight that an organization is more than arandomcompilation of machinery, equipment,

people and money.Only if these things are arranged into systems and systematic activate sit will

become possible to produce something for which customers are willing to pay a price. Porter

argues that the ability to perform particular activities and to manage the linkages between these

activitiesis a source of competitive advantage.

In competitive terms, value is the amount buyers are willing to pay for what a firms provides

them. A firm is profitable if the value its commands exceeds the cost involved in creating theproduct. Creating value for buyers that exceeds the cost of doing so is the goal of any generic

strategy. The value chain dispays total value and consists of value activities that are the

physically and technologically distinct activities a firm performs and margin is the difference

between total value and the collective cost of performing the value activities.


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Value chain can be defined as the appropriate degree of disaggregation depends on the

economics of the activities and the purposes for which the value chain is being analyzed. The

basic principle is that activities should be isolated and seperated that (1) have different

economics, (2) have a high potential impact of differentiation, (3) represent a significant or

growing proportion of cost. Selection the appropriate category in which to put an activity mau

require judgement and can be illuminating in its own right. Value activities should be assigned to

categories that best represent their contribution to a firms competitive advantage.

Formal elements of value chain analysis

Porter distinguishes between primary activities and support activities. Primary activities are

directly concerned with the creation or delivery of a producor service. They can be grouped into

five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and

service. Each of these primary activities is linked to support activities which help to improve

their effectiveness or efficiency.There are four main areas of support activities: procurement,

technology development (including R&D), human resource management, and infrastructure

(systems for planning, finance, quality, information management etc.).

The basic model of Porters Value Chain is as follows:


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The term Margin implies that organizations realize a profit margin that depends on their ability

to manage the linkages between all activities in the value chain. In other words,the or ganization

is able to deliver a product / service for which the customer is willing to pay more than the sum

of the costs of all activities in the value chain.

Some thought about the linkages between activities: These linkages are crucial for corporate

success.The linkages are flows of information, goods and services, as well as systems and

processes for adjusting activities. Their importance is best illustrated with some simple

examples: Only if the Marketing & Salfunction delivers sales forecasts for the next period to all

other departments in time and in reliable accuracy, procurement will be able to order the

necessary material for the correct date.And only if procurement does a good job and forwards

order information to inbound logistics, only than operations will be able to schedule production

in a way that guarantees the delivery of products in a timely and effective manneras pre-

determined by marketing. In the result, the linkages are about seamless cooperation and

information flow between the value chain activities.

In most industries, it is rather unusual that a single company performs all activities from product

de-sign, production of components,and final assembly to delivery to the final user by itself. Most

often, organizations are elements of a value system or supply chain. Hence, value chain analysis

should cover the whole value system in which the organization operates.

Within the whole value system, there is only a certain value of profit margi n available. This is

the difference of the final price the customer pays and the sum of all costs incurred with the

production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the

structure of the value system, how this margin spreads across the suppliers, producers,

distributors, customers, and other elements of the value system. Each member of the system will

use its market position and negotiating power to get a higher proportion of this margin.

Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce

their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing

stocks in a Just-In-Time system).


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from basic raw material sources from component suppliers through to the ultimate end-use

product delivered into the final consumers hands. This description views the firm as part of an

overall chain of value-creating processes.

According to Shank and Govindarajan,the industryvalue chain starts with the value-creating

processes of suppliers, who provide the basic raw materials and components. It continues with

the value-creating processes of different classes of buyers or end-use consumers, and culminates

in the disposal and recycling of materials.

ACITIVITY TYPES

Within each category of primary and support activities, there are three activity types that play

adifferent role in competitive advantage.

Direct activities involved in creating value for the buyer, such as assembly, parts

machining, sales force operation, advertising, product design, recruiting etc.

Indirect activities that make it possible to perform direct activities on a continuing basis,

such as maintenance, scheduling, operation of facilities, sales force administration,

research administration, vendor record keeping etc.

Quality assurance activities that ensure the quaity of other activities, such as monitoring,

inspecting, testing, reviewing, checking, adjusting and reworking.

All three types are present not only among primary activities but also among support activities.

LINKAGES WITHIN THE VALUE CHAIN

Value activities are related by linkages within the value chain. Linkages are relationships

between the way one value activity is performed and the cost or performance of another.

Comprtitive advantage frequently derives from linkages among activities just as it does from the

individual activities themselves. Linkages can lead to competitive advantage in two ways;

optimization and coordination. A firm must optimize such linkages linkages reflecting its


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strategy in order to achive competitive advantage. The ability to coordination linkages often

reduces cost or enhances differentiation. Linkages among value activities arise from a number of

generic causes, (1) the same function can be performed in different ways, (2) the cost or

performance of direct activities is improved by greater efforts in indirect activities, (3) activities

performed inside a firm reduce the need to demonstrate, explain or service a product in the field,

(4) quality assurance functions can be performed in different ways. Given the difficulty of

recognizing and managing linkages, the ability to do so often yields a sustainable source of

competitive advantage.

Vertical Linkage Analysis

Linkages among value-creating processes do not end with the activities within a firm. The

greatestcompetitive advantage may come out of linkages between a firms value-creating

activities andthose of its suppliers, channels or users.Vertical linkage analysis is a much broader

application of internal cost and differentiation analysis that includes all upstream and

downstream value-creating processes throughout the industry.Vertical linkage analysis considers

all links from the source of raw materials to the disposal and/or recycling of the product.

Shank and Govindarajan (1993) state the importance of vertical linkages:

Gaining and sustaining a competitive advantage requires that a firm understand the entire value

delivery system, not just the portion of the value chain in which it participates. Suppliers and

customers and suppliers suppliers and customers customers have profit margins that are

important to identify in understanding a firms cost/differentiation positioning, because the end-

use customers ultimately pay for all the profit margins along the entire value chain.Vertical

linkage can reveal which activities are the most (and least) critical to competitive advantage (or

disadvantage). For example, Swiss watchmakers succeeded for years as relatively small,labor-

intensive assemblers. Then came the 1970s and the advent of low-cost, mass-produced watches.

The Swiss responded by restructuring their industry to gain economies of scale similar to those

enjoyed by their new global competitors. How ever, the Swiss failed to realize that their critical

problem was not in manufacturing. This set of activities added only a small proportion of the

value of their final product. Far more significant were downstream activities in output

logistics,marketing, sales and service. Beyond being able to make a watch cheaply, the Swiss had


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to lower their costs of distribution and service. They came up with the hugely successful

Swatch,which,besides being inexpensively priced, was virtually indestructible and could be

distributed through numerous low-cost channels, from department stores to discount houses.

Vertical linkage analysis includes the following steps:

identify the industrys value chain and assign costs, revenues and assets to value -creatingprocesses;

diagnose the cost drivers for each value-creating process; and

evaluate the opportunities for sustainable competitive advantage.

Types of Competitive AdvantageMichael Porter argues that there are only two types of competitive advantage:

competitive advantage that comes from differentiationproviding some kind of unique

value to particular customers

competitive advantage that comes from having the cost leadership position

While it would be nice to have both, under normal conditions, the two forms of competitive

advantage are mutually exclusive and, if businesses fail to choose, they getstuck in the middle.

Michael Porter believes that these competitive advantages derive from the activities the business

does which are:

done better than competitors;

done differently than competitors;

that create unique benefits; or

done at a lower cost than competitors.

To understand the source of competitive advantage then you need to perform a value chain

analysis which identifies the separate value activities.
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COMPETITIVE ADVANTAGE AND

CUSTOMER VALUE

In order to survive and prosper in an industry,firms must meet two criteria: they must supply

what customers want to buy, and they must survive competition. A firmsoverall competitive

advantage derives from the difference between the value it offers to customers and its cost of

creating that customer value. Competitive advantage in regard to products and services takes two

possible forms.

The first is an offering or differentiation advantage.If customers perceive a product or

service as superior, they become more willing to pay a premium price relative to the price

they will pay for competing offerings.

The second is a relative low-cost advantage,which customers gain when a companys

total costs undercut those of its average competitor.

Differentiation Advantage

A differentiation advantage occurs when customers perceive that a business units product

offering (defined to include all attributes relevant to the buying decision) is of higher quality,

incurs fewer risks and/or outperforms competing product offerings. For example, differentiation

may include a firms ability to deliver goods and services in a timely manner, to produce better

quality, to offer the customer a wider range of goods and services,and other factors that provide

unique customer value.Once a company has successfully differentiated its offering, management

may exploit the advan-tage in one of two ways: increase price until it just offsets the

improvement in customer benefits,thus maintaining current market share; or price below the full

premium level in order to build market share.

Low-Cost Advantage

A firm enjoys a relative cost advantage if its total costs are lower than the market average. This

relative cost advantage enables a business to do one of two things: price its product or service


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lower than its competitors in order to gain market share and still maintain current profitability; or

match the price of competing products or services and increase its profitability.

Many sources of cost advantage exist: access to low-cost raw materials; innovative process

technology; low-cost access to distribution channels or customers: and superior operating

management. A company might also gain a relative cost advantage by exploiting economies

of scale in some markets.

The relationship between low-cost advantage and differentiation advantage is given:

Superior

Inferior

Inferior Superior

Source: Shankand Govindarajan, 1993.

Superior relative cost position offers equivalent customer value for a lower price. Superior

relative differentiation position offers better customer value for an equivalent

price.Organizations that fail to gain competitive advantage through low cost or superior differen-

tiation, or both, are stuck-in-the-middle. Forinstance, several American bicycle

makers,including Schwinn, Huffy, Murray and Columbia,found themselves in this position

during the1980s. These companies lacked a cost advantageand failed to foresee the emerging

mountain bike market. By contrast, Cannondale captured market share after introducing its large-

diameter frame bicycle.

Differentiation

Advantage

Didderentiation with

Cosy Advantage

Stuck- in- the

Middle

Low- cost

Advantage


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COMPETITIVE SCOPE AND THE VALUE

CHAIN

Competitive scope can have a powerful effect on competitive advantage, because it shapes the

configuration and economics of the value chain. The scope or breadth of an organizations value

chain activities can be very important to its efforts to gain competitive advantage. This scope is a

function of the number of distinct but related value chains in which the organization engages.

Through linkages between them, a multi-chain organization can improve the economics of some

or all of its value chains.

Relatively broad scope can give the organization the cost and control benefits of performing

more activities internally than its competitors. It may also allow the organization to exploit the

economies of interrelationships between value chains serving different segments, regions and

related industries. Examples include shared production facilities, technical expertise or sales

forces.

Relatively narrow scope can also yield competitive advantage through tailoring the value chain

to serve a particular segment or region in some unique or low-cost way. It lets the organization

concentrate on becoming the very best at its particular specialty. The following four dimensions

of scope have generally been identified that affect the value chain:

Segment scopethe product/service varieties produced and buyers served;

Vertical scopethe extent to which activities are performed in-house instead of by

independent organizations;

Geographical scopethe range of regions, countries or groups of countries in which an

organization competes with a coordinated strategy; and

Industry scopethe range of related industries in which the organization competes with a

coordinated strategy.


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SegmentScope

This reflects an organizations variety of outputs and customers served. On the one hand, low

variety or focus, can lead to competitive advantage, if significant differences exist between the

value chains of user or product segments.

A broad segment scope can also yield competitive advantage, if economies can be gained from

interrelationships among the value chains serving different segments.

The focus strategy is most likely to succeed when substantial differences exist between the

special needs (value chains) of different segments in the industry. This kind of trade-off between

broad and narrow scope is at the heart of the choice of a focus strategy.

VerticalScope

This is the extent to which the organization performs activities in-house versus externally. It

defines the degree of vertical integration between an organization and its suppliers, channels or

users. Vertical integration is often looked at as an either-or, make-or-buy type of decision.

However, the value chain analysis demonstrates that vertical scope can focus on selected

activities as opposed to the whole chain of the upstream or downstream organization. For

example, an organization can rely on a channel to service its product or do it itself. Similarly, theorganization may have a supplier do its engineering design or even some or all of its

manufacturing.

Like segment scope, vertical scope involves tradeoffs between the benefits of low versus high

scope. High vertical integration relative to competitors can have advantages for low cost or

differentiation strategies if the organization can exploit the benefits of vertical interrelationships.

On the other hand, low integration offers an organization the advantages of greater flexibility in

switching sources of supply or delivery channels as conditions change.

GeographicScope

This reflects the range of regions or countries in which the organization competes with a


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coordinated strategy. Geographic scope allows an organization to gain substantial competitive

advantages by sharing or coordinating similar value activities in different places.

IndustryScope

This is the range of related industries in which the organization competes with a coordinated

strategy. Linkages between the value chains of business units competing in different industries

present numerous opportunities to gain competitive advantages. These linkages can involve

virtually any value activity such as shared facilities, technology, personnel and even expertise

(United Technologies Corporation;http://www.utc.com).

JointVenturesandCompetitiveScope

For a variety of reasons an organization may find it convenient to pursue competitive scope by

forging coalitions with other organizations. Rather than commit itself to the added facilities and

personnel, required to expand its scope with increased capital requirements, an organization may

enter into some kind of coalition to link some of its value activities with those of other

companies. The degree of commitment can vary from mere contractual agreements with an

independent organization, such as long-term supply contracts, joint marketing agreements and

technology licenses, to actual joint ventures.

For example, licensing allows the licensee quick access to a new technology or product without

extensive R&D, thus widening segment or industry scope. The licensor also benefits from a

broader scope by having its new product or technology available to a wider variety of users.

COALITIONS AND SCOPE

A firm can pursue the benefits of a broader scope internally,or enter into coalitions with

independent firms to achieve some or all of the same benefits. Coalitions are long-term

agreements among firms that go beyond normal market transactions but fall short of outright

mergers. A strong coalition partner may appropriate all the gains of a shared marketing

organization through the termsof the agreement.
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Coalitions provide a way for an organization to test the waters in new industry segments,

regions or related industries, without resorting to internal development or acquisitions. Coalitions

also allow an organization to gain the cost and control benefits of vertical linkages without actual

integration.

COMPETITIVE SCOPE

The relationship between competitive scope and the value chain provides the basis for defining

relevant business unit boundaries. Strong and widespread benefits of integration or geographic or

industry intrrelationships widen the relevant boundaries of business units. Strong

interrelationships between one business unit and another may imply that they should merge into

one.

The industry value chain structure

Industry structure both shapes the value chain of a firm and is a reflecion of the collective value

chains of competitiors. Structure determines the bargaining relationships with buyers and

suppliers that is reflected in both the configuration of afirms value chain and how margins are

divided with buyers, suppliers and coalition partners. The array of competitor value chains is the

basis for many elements of industry structure.

The value chain of an industry starts with the raw material manufacturer and finishes with the

delivery of the final product to the customer. The key to analyzing the industry value chain is to

comprehend and use the advantage of a companys comparative strength within the industry.

All industries begin with a raw material and end with a sale to a customer. There are many links

within this process. There are upstream links and downstream links. Each separate link stands for

an independent, economically viable segment of the industry. To establish which links in the

industry value chain are separate, assess these two questions:

1. Is there a market for the output of this link in the industry value chain, or can a market

price be determined objectively?


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2. Are there any companies that produce and sell only within this link of the chain?

If the answer is yes to either of these questions, then the industry under consideration may be a

separate link in the industry value chain. Then, after the industry value chain is determined, a

company should examine the relative strength of its position, in any separate link, in the industry

value chain. A companys position within the industry link can be found by using a myriad of

measurements, including industry margins, return on assets, benchmarking, and capital

budgeting. When a company then finds where it has deficiencies in relative industry strength, it

can go back to the internal value chain activities to improve its standing with its competitors and

then gain a competitive advantage.

Value chain and the organizationalstructure

The value chain can also play a valuable role in designing organizational structure.

Organizational structure groups certain activities together under organizational units such as

marketing or production. Organizational structure balances the benefits of seperation and

integration. Vertical linkages are often not well provided for in organizational structure. An

organizational structure that corresponds to the value chain will improve a firms ability to createand sustain competitive advantage.

According to Michael Porter value is the chain of activities for a company that operates in a

specific industry. For gaining the competitive advantages, Porter suggested that going through

the chain of organization activities will add more value to the product and services than the sum

of added cost of these activities. And thus, the company will gain marginal value for that product

or service. If these activities run efficiently the company gains competitive advantage on the

product or service. For this case the customers should transact the product or services willinglyand provide return on value to the organization.

The value chain framework can be used as powerful analysis tool for the strategic planning and

to build the organizational model ensuring an effective leadership model. The value chain

concept can be applied also in the individual business unit and can be extended to the whole


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supply chains and distribution networks. To form a successful product for an organization it is

important to add value in each activity that the product goes through during the life cycle. The

best possible value can be achieved in the product development process by adding value in each

stage. For that it needs all, or a combination of, value chain activities and a proper

synchronization among all the related activities. A proper organization is required that contains

all the required functional departments to perform these activities and a proper communication

approach is required to synchronize the activities of these functional units efficiently.

Mapping of porters value chain activities into business

functionalities:

The product related activities can be divided among functional units: production performs

operational activities, partly inbound logistics, and services activities. Software production

includes the activities as product development, testing, packaging, maintenance, installation,

updating, trainings, etc. Sales performs part of service activities (e.g. guarantees, warranties).

Inbound logistics activities can be shared between logistic department and the production

function as inventory management activity. In SMEs logistic department can be merged with

marketing & sales unit. Production process and production value means profitability analysis is

decided by production management functionality. In brief, the function of the production

management is to manage the production activities to meet the strategic goals.

Market related activities can be classified as function of marketing and sales. In many

organizations marketing and sales are two independent departments that work in collaboration.

But in SMEs both departments can be merged into one department to perform all the relative

activities. The decision process of marketing and sales depends on the revenue and cost element

of all the marketing and sales activities. This decision making functionalities can be defined as

marketing and sales management to manage the marketing and sales activities and more

importantly they take the decision whether the marketing and sales add value to the products, or

services, and the organization.


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The Technology Management activities can be presented as research and development (R&D)

function which increases the stock of knowledge for the organization. Infrastructure related

activities can be divided into key business functions of general management, finance and

accounting, quality management, and general management Depending on the size of

organization, procurement activities may belong to the marketing and sales department in

collaboration with production operation for scaling the need of quality and quantity. Human

resource management activities can be performed by the human resource (HR) department.

Practical Impact

After mapping the porters value chain activities to the required business functionality we can

summarize the value chain business functions into following categories:

Primary Business Functions: The functions perform product and market related activities. These

are production, quality management, marketing and sales, production management, and

marketing and sales Management.

Supportive Business Functions: The functions that perform these processes that are necessary for

the execution of value added primary activities effectively and efficiently. These are research and

development, accounting and finance, human resource management, and general management.

As a summary, the porter value chain model framework can be generally defined as nine major

functions of business. These business functions are in brief:

1. Production (P): This is the process to produce a good or service from the inputs collected from

the supplier using the resources that carry a cost determined by production factors.

2. Production Management (PM): This is the decision process about the profitability of theproduction activity to produce a good or service. The profitability measurement can be done by

assessing the revenue and cost of the production factors. The outcomes are the management of

the all the production functions as well as heartbeat (day-by-day operations) and integration of

operations to achieve the desired strategic outcome.


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1. Production (P): This is the process to produce a good or service from the inputs collected from

the supplier using the resources that carry a cost determined by production factors.

2. Production Management (PM): This is the decision process about the profitability of the

production activity to produce a good or service. The profitability measurement can be done by

assessing the revenue and cost of the production factors. The outcomes are the management of

the all the production functions as well as heartbeat (day-by-day operations) and integration of

operations to achieve the desired strategic outcome.

3. Quality Management (QM): The quality of a product is the integral part of product itself. But

maintaining the quality in all level of corporate grows the confidence that the qualityrequirements of the product or service will be met. To some extent, to assure the quality of the

product is the part of production management functionality but in globally the quality

management provides the process of quality assurance by fulfilling the requirement of quality

management system like ISO 9000 for achieving the desired quality of the products, services,

and the entire corporate activities.

4. Marketing and Sales (M&S): Marketing is the social process by which individuals and groups

obtain what they need through creating and exchanging products and value with others. In brief,

according to the chartered institute of marketing (CIM), marketing is the process that identifies,

anticipates, and satisfies the customer requirements profitability. Sales perform all the exchange

process of goods or services to the customers in return of money or its equivalent.

5. General Management (GM): GM has overall responsibility for the organization. He has profit

and loss responsibility of the company. In general, GM oversees all the firms functions as well

as day-to-day operations to sustain the companys integrity and growth.

6. Marketing & Sales (M&S) Management: This is the decision process about the profit and loss

elements related to marketing and sales activities. It also oversees the production functions


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including day-to-day operations to synchronize the marketing and sales activities with the

production activities.

7. Accounting and Finance (A&F): Finance creates value from the companys capital budgeting,

financing, and net working capital activities. Accounting is the process for analyzing,

summarizing the financial activities as well as interpret, and communicate the financial results to

internal and external stakeholders].

8. Research and Development (R&D): This comprises the creative activity in a systematic way

for the creation of new business, to improve the knowledge for the efficient usage of the existing

resources, and in general to diversify the applications of the stock of knowledge.

9. Human Resource (HR) Management: This is the workforce management process of the

organization to build up the desirable working environment and the competence to achieve the

strategic goals of the company.

The success of a company is measured by its profitability, which is closely connected to the

efficiency of the performed activities. All the activities in an organization have cost and generate

a return. If rate of return is greater than the cost the activities add value to the organization. For

achieving the premium rate of return, businesses need to perform economic activities efficiently.

According to Porter the efficiency of the activities depends on the finalization processes in the

interrelated areas of the organization, strategy, and tactics [36]. The platform of performing

activities is the business organization. The pre condition to accomplish the value added activities

is the efficient organization. The efficient organization must have all the value added functions

of business for the proper interrelations of value added activities.

Individually all the single business function also produce the result and perform value creation

activities. For achieving Porters value added efficiency it is important to include all nine major

functions as sub-functions in each major business function.


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CONCLUSION

As a unifying theme, value chain analysis presents organizations with an overarching tool for

improving their strategic planning and resource allocation. The goal is to provide managementwith sufficient options to sustain its competitive advantage in an ever-changing business

environment. Analyzing costs and differentiation through the value chain is an essential

component in the search for competitive advantage. The data problems are not insignificant and

the answers will not always be precise. Nevertheless, there will be considerable benefit in the

debate that results from the process and in the enhanced quantitative awareness of the external

competitive arena and of the firms part in it. As so often in strategic planning, the process is

often as valuable as the outcome. This is really important: In most cases, the more value

companies create, the more people will be prepared to pay a good price for their product or

service, and the more they will they keep on buying from them. On a personal level, if the

company add a lot of value to their team, they will excel in what they do. They should then

expect to be rewarded in line with their contribution. This is where the "Value Chain Analysis"

tool is useful. Value Chain Analysis helps the company identify the ways in which they create

value for their customers, and then helps them think through how they can maximize this value:

whether through superb products, greatservices, or jobs well done.


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Value Chain & Competitive Advantage.(FINAL)

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