Video: – 09.02.2024 [Sachin Education Hub Notes]
Topic: – Value Chain Analysis – Its need elements [Sachin Education Hub]
[Sachin Education Hub] – The concept of the value chain was introduced by Michael Porter in his book “Competitive Advantage: Creating and Sustaining Superior Performance.” According to Porter, a company’s value chain consists of primary activities and support activities:
Components of a value chain analysis: [Sachin Education Hub]
- Primary Activities:
- Inbound Logistics: This involves the process of receiving, storing, and distributing inputs (raw materials, components) for a product.
- Operations: These are the core production activities that transform inputs into the final product or service. [Sachin Education Hub]
- Outbound Logistics: This includes the processes of storing and delivering the finished product to customers.
- Marketing and Sales: These activities focus on promoting and selling the product or service.
- Service: After-sales service and support to maintain and enhance the product’s value. [Sachin Education Hub]
- Support Activities:
- Infrastructure: This includes support functions like management, finance, and quality control that enable the primary activities to take place.[Sachin Education Hub]
- Human Resource Management: Activities related to recruiting, training, and retaining employees.
- Technology Development: Includes research and development, technology acquisition, and innovation.
- Procurement: The process of sourcing and acquiring the resources needed for the value chain
Need of Value Chain analysis: [Sachin Education Hub]
- Identifies areas of competitive advantage and differentiation.[Sachin Education Hub]
- Helps in optimizing resource allocation and cost management.
- Enhances understanding of customer value creation.[Sachin Education Hub]
- Facilitates strategic decision-making and planning.
- Enables identification of opportunities for process improvement.
Problems of Value Chain analysis:
- Overemphasis on internal processes, neglecting external factors like market dynamics.
- Difficulty in accurately quantifying costs and benefits associated with each value chain activity.
- Lack of data availability or reliability, hindering thorough analysis. [Sachin Education Hub]
- Challenges in integrating qualitative factors, such as brand reputation or customer perception, into the analysis.
- Complexity in analyzing interconnected and interdependent value chain networks, especially in global supply chains. [Sachin Education Hub]
