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Value Chain Analysis: DR Norziaton Binti Ismail Khan

This document provides a summary of value chain analysis for Dr Norziaton Binti Ismail Khan. It was prepared by a group of 4 students and discusses Porter's value chain model, the primary and support activities that make up a value chain, and approaches for gaining competitive advantage through cost leadership and differentiation. It then provides McDonald's as an example and summarizes how it leverages various primary and support activities in its value chain.

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ahmadfarid
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45 views

Value Chain Analysis: DR Norziaton Binti Ismail Khan

This document provides a summary of value chain analysis for Dr Norziaton Binti Ismail Khan. It was prepared by a group of 4 students and discusses Porter's value chain model, the primary and support activities that make up a value chain, and approaches for gaining competitive advantage through cost leadership and differentiation. It then provides McDonald's as an example and summarizes how it leverages various primary and support activities in its value chain.

Uploaded by

ahmadfarid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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VALUE CHAIN ANALYSIS

Prepared for :
Dr Norziaton Binti Ismail Khan

Prepared by :
Aiza Farhain Binti Fauzi 2015836598
Nur Afza Binti Shamsul Bahrin 2015856662
Nur Hazwani Hazirah Binti Maliki 2015826696
Siti Norsuhada Binti Che Ghani 2015237644

Group:
AC220 8E
Value Chain?
• Value is how much customers willing to pay for
our products or services.
• Value chain represents the internal activities a
firm engages in when transforming inputs into
outputs.
• Value chain analysis is a process where a firm
identifies its primary and support activities that
add value to its final product analyze these
activities to reduce costs or increase
differentiation.
Founder
• Introduced by Michael E. Porter in 1985.
• Discussed in his books ‘Competitive
Advantage’.
Porter’s Value Chain Model
Primary activities
Related directly to the physical creation, sale,
maintenance and support of a product or
service. They consist of the following:
- Inbound logistic
- Operations
- Outbound logistics
- Marketing and sales
- Service
Support activities
Support the primary function (indirectly add
value). They consist of:
- Procurement (purchasing)
- Human resources management
- Technological development
- Firm Infrastructure
Approaches
• Competitive Advantage Types:

1. Cost advantage
- Organization try to compete on cost and want
to understand the sources of their cost
advantage or disadvantage and what factor
drive those cost.
Competitive Advantage Types (cont’d):
5 analysis steps to gain cost advantage:

Step 1 • Identify the firm’s primary and support activities

• Establish the relative importance of each activity in the total cost of


Step 2 the product

•Identify cost drivers for each activity


Step 3

• Identify links between activities


Step 4

• Identify opportunities for reducing cost


Step 5
Competitive Advantage Types (cont’d):

2. Differentiation advantage
- Strive to create superior product or services
use differentiation advantage approaches.
Competitive Advantage Types (cont’d):
3 analysis steps to gain differentiation
advantage:

• Identify the customers’ value – creating activities


Step 1

• Evaluate the differentiation strategies for


Step 2 improving customer value

• Identify the best sustainable differentiation


Step 3
Advantages and Disadvantages

- Increase competitive - Too much work.


advantage. - Employee
- Very flexible strategy limitation.
tool.
- Increase product
value.
Example

McDonald’s
Primary Activities
• Inbound logistics
- McD’s purchases raw vegetables and other raw
materials from its fixed, pre-defined suppliers only,
therefore by increasing capital and labour, their
production will increase proportionately.

• Operations
- Ensure specific guidelines are followed in food
preparation.
- Computerized order tracking technology that
ensures consistency in service and food production.
Primary Activities (cont’d)
• Outbound logistics
- Providing the highest quality food and
superior service, and a great value, in a clean
and welcoming environment.
- Focus on energy conservation, sustainable
packaging and waste management.
Primary Activities (cont’d)
• Marketing & sales
- Found in 119 countries around the world and
operates over 33,000 restaurant worldwide.
- Maintain an extensive advertising campaign.

• Service
- Free Wi-Fi for customers
- Delivery service for customers
- Play place and parties
Support Activities
• Procurement
- E-procurement system provides the backbone not only
to all the logistics but the whole McD’s supply chain
management.
- Allow business owner’s to buy supplies and materials
at the discounted price.

• Human resources management


- Offer flexible working hours .
- Conduct training session.
- Providing sufficient training to employees.
Support Activities (cont’d)
• Technological development
- Drive-thru
- Online order

• Firm Infrastructure
- Conduct hotline customer service to file
complain or offer suggestion.

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