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Value Chain

Value Chain Management involves the activities a company undertakes to add value to its products or services, including production, marketing, and after-sales service. It is categorized into manufacturing, service, or both, and aims to identify competitive advantages through cost reduction and product differentiation. The document also discusses primary and support activities within the value chain, as well as the Balanced Scorecard framework for evaluating a firm's performance from multiple perspectives.

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2 views

Value Chain

Value Chain Management involves the activities a company undertakes to add value to its products or services, including production, marketing, and after-sales service. It is categorized into manufacturing, service, or both, and aims to identify competitive advantages through cost reduction and product differentiation. The document also discusses primary and support activities within the value chain, as well as the Balanced Scorecard framework for evaluating a firm's performance from multiple perspectives.

Uploaded by

Seven Teen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Value Chain Management

Value-Chain

Value is the amount that buyers are willing to pay for what a firm
provides them and is measured by total revenue.

The value chain is the process or activities by which a company adds


value to an article, including production, marketing and the provision of
after-sales service.

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Type of Value-Chain

Value Chain is categorized into types based on


the type of organizations
• Manufacturing based.
• Service based.
• Both manufacturing and service based.

3-3
Objective of Value-Chain

• Used to identify sources of competitive advantage


• Specifically:
– Opportunities to secure cost advantages
– Opportunities to create product/service
differentiation
• Includes the value-creating activities of all industry
participants

3-4
The Value Chain

3-5
Wallmart Value Chain Analysis

3-6
Primary Activity: Inbound Logistics
Associated with receiving, storing and
distributing inputs to the product
 Location of distribution facilities
 Warehouse layout
and designs

3-7
Primary Activity: Operations
Associated with transforming inputs into
the final product form
 Efficient plant operations
 Incorporation of appropriate process
technology
 Efficient plant layout and
workflow design

3-8
Primary Activity: Outbound Logistics
Associated with collecting, storing, and
distributing the product or service to
buyers
 Effective shipping processes to provide quick
delivery and minimize damages
 Shipping of goods in large lot sizes to
minimize transportation costs.

3-9
Primary Activity: Marketing and Sales
Associated with purchases of products
and services by end users and the
inducements used to get them to make
purchases
 Innovative approaches to promotion
and
advertising
 Proper identification of customer segments
and needs

3-10
Primary Activity: Service
Associated with providing service to
enhance or maintain the value of the
product
 Quick response to customer needs and
emergencies
 Quality of service
personnel and
ongoing training

3-11
Support Activity: Procurement
Function of purchasing inputs used in the
firm’s value chain
 Procurement of raw material inputs
 Development of collaborative “win-win”
relationships with suppliers
 Analysis and selection of alternate sources
of inputs to minimize dependence on one
supplier

3-12
Support Activity:
Human Resource Management
Activities involved in the recruiting, hiring,
training, development, and compensation
of all types of personnel
 Effective recruiting, development, and
retention mechanisms for employees
 Quality relations with trade unions
 Reward and incentive programs to motivate
all employees

3-13
Support Activity:
Technology Development
Related to a wide range of activities and
those embodied in processes and
equipment and the product itself
 Effective R&D activities for process and
product initiatives
 Positive collaborative relationships
between
R&D and other departments
 Excellent professional qualifications
of
personnel 3-14
Support Activity:
General Administration
Typically supports the entire value chain
and not individual activities
 Effective planning systems
 Excellent relationships with diverse
stakeholder groups
 Effective information technology
to integrate
value-creating activities

3-15
Value Chains in Service Industries

3-17
The Balance Scorecard
Provides a meaningful integration of many
issues that come into evaluating a firm’s
performance
Four key perspectives
 How do customers see us?
 What must we excel at?
 Can we continue to improve and create
value?
 How do we look to shareholders?
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Customer Perspective
Time
Quality
Performance and service
Cost

3-19
Internal Business Perspective
Processes
Decisions
Actions
Coordination
Resources and
capabilities

3-20
Innovation and Learning Perspective
Introduction of new products and services
Greater value for customers
Increased operating efficiencies

3-21
Financial Perspective
Profitability
Growth
Shareholder value
Increased market share
Reduced operating expenses
Higher asset turnover

3-22

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