Porter’s Value Chain Analysis

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 Introduction
❑ Value chain represents the internal activities a firm engages in when
transforming inputs into outputs.

❑ Value Chain Analysis (VCA) is a strategy tool used to analyze firm’s activities by
recognizing which activities are the valuable to the firm and which ones needs to
be improved.

❑ It involves identification of primary and supportive activities that add value to the
final product.

❑ Michael Porter introduced Generic Value Chain Model in 1985.

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 Firm Infrastructure
(Financing, Planning, Investor Relation, Organizational Structure)
S
U Human Resource Management
P (Recruiting, Training, Compensating, Grievance handling)

P
O Technology Development
(Product Design, Testing Facility, Market Research, Enterprise Resource Planning)
R
M
Porter’s Value T Procurement Resources
(Components, Machinery, Vendor, Advertisement, Services) A
R
Chain Analysis
Inbound Operations Outbound Marketing Service
Logistic Logistic And Sales G
P
R Receiving Manufacturing Warehousing Advertisement Customer
I
I Service N
Data Storing Assembly Order Fulfilment Selling
M Upgrading
Inventory Testing Dispatch Promotion
A Control Training
R Daily Operation Transportation Pricing
Transportation
Y Scheduling

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 Primary Activities
Primary activities are directly involved in transforming inputs into outputs and
in delivery and after sales support.

▪ Inbound Logistics – Raw Material Handling and Warehousing

▪ Operations – Transforming Inputs into the Final Products
▪ Outbound Logistics – Warehousing and Distribution of Finished Goods
▪ Marketing & Sales – Communication, Pricing and Channel Management
▪ Services – Installation, Repair and After-Sales Support
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 Value Chain of LLOYD AC.
Purchase of Raw Material & Components
Inbound
Logistics

▪ Installation
▪ Repair Services &
Support
Operations Manufacturing of A.C. into a
▪ After Sales Servicing PRIMARY
finished product
ACTIVITIES

▪ Segmentation Marketing Outbound Transporting A.C.to Distributors and

▪
and Sales Logistics
Targeting Wholesalers
▪ Branding
▪ Pricing
▪ Advertising
▪ Promotional Offers
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 Firm Infrastructure
(Financing, Planning, Investor Relation, Organizational Structure)
S
U Human Resource Management
P (Recruiting, Training, Compensating, Grievance handling)

P
O Technology Development
(Product Design, Testing Facility, Market Research, Enterprise Resource Planning)
R
M
Porter’s Value T Procurement Resources
(Components, Machinery, Vendor, Advertisement, Services) A
R
Chain Analysis
Inbound Operations Outbound Marketing Service
Logistic Logistic And Sales G
P
R Receiving Manufacturing Warehousing Advertisement Customer
I
I Service N
Data Storing Assembly Order Fulfilment Selling
M Upgrading
Inventory Testing Dispatch Promotion
A Control Training
R Daily Operation Transportation Pricing
Transportation
Y Scheduling

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 Support Activities
● Firm Infrastructure refers to an organization’s structure and its management,
functions, planning, accounting, finance, quality-control mechanism.

Firms infrastructure can be a powerful factor for competitive advantage.

● Procurement Resources refers to the function of purchasing inputs used in the firm’s
value chain.

This function adds value to the company by employing required inputs and effectively
managing the firm’s cost.

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 Support Activities

● Technology Development incorporates a wide range of technology-related activities

to improve the product and the process.

Technology development plays a prominent role in differentiating and having

competitive advantage

● Human Resource Management consists of activities involved in recruitment, hiring,

training, development, compensation of all type of human manpower.

It supports both the primary activities and the entire value chain.

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 Need for Value Chain Analysis

● Cost Advantage

● Competitive Advantage

● Profitability

Value Chain Competitive Advantage Higher Profitability

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 Support Activities: The Coca-Cola Company

● Firm Infrastructure
○ 800 plants over 200 countries and territories
○ Market Capitalization: $235.35 Billion
○ Advertisement : $5.8 Billion
○ Largest Distribution Network

● Procurement Resources
○ Coca-Cola Bottlers’ Sales and Service
■ Customer Business Solution : a data and service integrator of/for
stakeholders
■ Procurement: Navigate external marketplace channels and categories and
supplier insights to solve client needs.

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 Support Activities: The Coca-Cola Company

● Technology Development
○ Product Innovation: Sugar free products, Greener packaging
○ Sustainable Innovation: “Zero-Waste Urban Environment”
○ Marketing Innovation: Digital Platform and Big Data Analysis for
accessing customers choice and forming strategies accordingly.

● Human Resource Management

○ Payments and Rewards
○ Employee Engagement Programs
○ Trainings and Education
○ Performance management

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Thank You !!!

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