Creating and Sustaining Superior Performance in
Within an organization the value chain is simply all the activities which are performed internally as they transforming raw inputs into finished products. Michael Porter first introduced the concept of the value chain inand your goal while you are analyzing it is to identify where you can improve and grow your competitive advantage.
If your goal is to differentiate, then your overall value goal is to perform all of your activities better than your competition.
Performing a Value Chain Analysis There are typically two types of competitive advantage that are striven for, cost and differentiation. To gain a differentiation advantage: Identify the value creating activities for the customer, and focus on the specific actions that create the most customer value.
Evaluate the differentiation strategies to improve value to the customer, such as adding more product features, putting an emphasis on customer service responsiveness, increase the ability to customize and tailor the products, and offer a range of complementary products that enhance your overall product mix Identify the best differentiation method that is sustainable long term, which is often a mix of many different activities to promote delivering a higher customer value.
The right combination will give you a sustainable differentiation advantage. To gain a cost advantage: Determine the primary activity of the company, and all the support activities performed Look at each activity back to even receiving the inventory, marketing, sales, and after sales support and clearly identify each, and make sure they are separate from each other.
This step is difficult, as it requires a strong knowledge of an organizations value chain, and often the value chain activities are not organized in the same way as the company is.
Analyze how the work is done surrounding every separate activity, and identify how it adds customer value Rank each activity in terms of relative importance to the total cost of the product Investigate all of the costs of producing the product or the service behind each activity Here you can use activity based costing to calculate specific costs at each process step Address any major sources of cost, or areas where you are lacking i.
You need to understand these before you can work at improving them. Identify if there are any links between the activities, because reducing costs in one may lead to further cost reductions in another. Identify opportunities where you are able to reduce costs.
Once you know these, you can make plans at improving each and every one. In business, the more value you can create, the more your customers will be willing to pay a good price for your products and services.
If you exceed the value that all of your competition provides, your clients will continue buying from you.
But how does this all apply in practice? Starbucks Primary activities Inbound logistics: This refers to the agents of the company purchasing coffee beans in Africa, communicating the importance of quality standards in the coffee beans and building strategic partnerships with suppliers.
Starbucks is currently in over 50 countries, with both direct stores operated by the company and licensing deals. The normal process is Starbucks selling their products in store without any intermediaries.
Recently, there are now retail products available in select supermarket chains. There is no heavy investment in marketing, but specials and tastings are common, especially when new stores open.
One of their main objectives is to provide superior levels of customer service. This is all of the general activities that are required to keep the stores operational, like management, finance, legal support and government relations. There are a wide range of training programs available for staff, who are considered to be one of Starbucks most important resources.
They make use of technology to save costs, and deliver a consistent tasting coffee, anywhere in the world. All the purchasing that is required to produce the end products, like the coffee beans, raw food items as well as the buildings, and machinery.
Based on the mix of activities above, Starbucks has capitalized on an international demand for delicious coffee, that has guests coming back again and again to experience the superior levels of service, and a coffee that always tastes great.
Primary activities Inbound logistics: They capitalize on economies of scale, and use massive global purchase orders to source the best prices on raw products for their restaurants.
By targeting areas where there is an affinity for Italian food, Pizza Hut operates in a huge number of countries globally with a licensing model where stores are managed by a local franchise owner.
There are two models that Pizza Hut capitalizes on, in store dining and their home delivery service. There is a large investment in marketing to drive additional sales, and compete with the other fast food chains.Supply Chain Management Value Of Supply Chains Words | 5 Pages.
Paper Heading: Supply Chain Management-Value of Supply Chain Introduction: Supply chain management is a complex undertaking that must involve more than one organization’s efforts to succeed.
An example of a firm that has achieved the maximum benefits from value chain analysis is the computer producing company Apple. Although, the computers they sell are high priced, they still mange to achieve the cost advantage among other computer brands by being number four in the sales of . We will write a custom essay sample on Supply chain manager specifically for you.
for only $ $/page. Order now. Value Chain and Supply Chain Article Analysis Paper ; synonyms and word definitions to make your research paper well-formatted and your essay highly evaluated.
Back. Our customer support team is available Monday. What is value chain analysis and how to use it? This article will show you the definition, model, and the example. "It can be defined as a strategic planning tool and it's used to analyze the value chain of the focal company.
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Starbucks Value-Chain Analysis John Dudovskiy. Value-chain analysis is an analytical framework that is used to analyse relationships between various parts of operations and the manner in which each part adds value to contribute to the level of revenues.