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InternalAnalysis ValueChain VicSaunders 1 WhatisaValueChain Avaluechaindescribesthecategoriesofactivitieswithinandaroundanorganisation whichtogethercreateaproductorservice 2 ValueChain Astructuredframeworkforexaminingcostsandperformance Itprovidesasoundbasisforinter firmcomparisons Allowscompaniestoimproveperformanceandeffectiveness Identifyareasinwhichtheycanaddcustomervalue 3 TheValueChainWithinanOrganisation 4 PrimaryActivities InboundLogistics activitiesconcernedwithreceiving storingandtheinternaldistributionofrawmaterials Operations themeansbywhichrawmaterialsareconvertedintothefinalproduct OutboundLogistics activitiesthatrelatetotheprocessofdeliveringtheproducttothecustomersuchasstorage warehousingandtransportation 5 PrimaryActivities MarketingandSales involvesmakingsurethecustomersareawareoftheproduct Service includesactivitiessuchascustomerservice after salesservice installationandtraining 6 SupportActivities FirmInfrastructure thisrelatestotheorganisationalstructure cultureandsystems HumanResourceManagement recruitment trainingandrewardingofstaff TechnologyDevelopment includesR D ITandprocessimprovements Procurement purchasingofvariousinputs 7 UsingtheValueChain Byusingthevaluechainafirmcangaincompetitiveadvantageby Porter1998 Inventingneworbetterwaystodotheactivities Combiningtheactivitiesinbetterways Managinglinkagesbetterinthevaluechainandthevaluenetwork 8 LimitationsoftheValueChain Themodelhasanumberoflimitations Meeketal2003 Itisnoteasytouse particularlyforserviceorganisations Itisveryinwardlyorientated ratherthanbeingfocusedontheexternalenvironment inparticularthemarketandcustomers Inmostindustriesasingleorganisationrarelyundertakesallthevalue creatingactivitiesandthereforeanyanalysisshouldrecognisethewidervaluesystem 9 WhatisaValueNetwork Avaluenetworkisthesetofinterorganisationallinksandrelationshipsthatarenecessarytocreateaproductorservice 10 ValueNetwork Thevaluechaincanbeextendedtoincludesuppliersanddistributors Itcanbeusedtoanalysetherelationshipbetweencompaniesandtoidentifywaysofaddingvalueinthesupplychain Porter 1998 referstothisasthe valuenetwork Forexample inarestaurantthequalityofingredientsisdeterminedbythegrower Inessencethegrowerhasaddedvalue 11 TheValueNetwork 12 UnderstandingtheCapabilitiesinRelationtotheValueNetwork Whichactivitiesarecentralimportanttoorganisation sstrategiccapability Wherearetheprofitpools Whatshouldbeoutsourced Whomightbethebestpartnersinthepartsofthevaluenetwork 13 StudentActivity Insmallgroupsprepareabriefingpaperon Howawashingmachinemanufacturercouldimproveeachareaofthevaluechaintohelpgaincompetitiveadvantage 14 PrimaryActivities InboundLogistics carefulhandlingtoensurenodamagetoincominggoods easeofaccesstothem linkingofpurchasestoproductionrequirements Operations highquality fewrejections deliveryontime Outboundlogistics rapiddeliverywhereandwhencustomersneedit Marketingandsales welltrainedandmotivatedsalesforce advertisingtiedtomarketsegments goodliterature AfterSalesService rapidinstallation speedyaftersalesserviceandrepair 15 SupportActivities Procurement purchasinghighqualitymaterials regionalwarehousingoffinishedproducts TechnologyDevelopment developmentofuniquefeatures newproducts useofITtomanagelogisticsmosteffectively HumanResourceManagement highqualitytraininganddevelopment recruitmentoftherightpeople appropriaterewardsystems FirmInfrastructure investmentinsuitablephysicalfacilitiestoimproveworkconditions supportfromseniormanagementincustomerrelations investmentinITsystems 16 PossibleExamQuestion Asaconsultantyouhavebeenasked asaninitialstep touseastructuredframeworktoexaminethecorecapabilitiesandperformanceofVirginAtlantic Inparticularyouhavebeenaskedtoevaluatetheusefulnessofthevaluechaininanalysingtheirperformanceanddemonstratehowtheyhaveusedittoaddvalueineachoftheareas 17 ExtendedKnowledge Forfurtherreadingon
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