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strategy - value chain analysis

Introduction

Value Chain Analysis describes the activities that take place in a

analysis of the competitive strength of the business. Influential work by M
the activities of a business could be grouped under two headings:

(1) Primary Activities - those that are directly concerned with creating an
component assembly); and

(2) Support Activities, which whilst they are not directly

effectiveness or efficiency (e.g. human resource management). It is rare
all primary and support activities.

Value Chain Analysis is one way of identifying which activities

which are best provided by others ("out sourced").

Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to

example, a business which wishes to outperform its competitors through
higher quality will have to perform its value chain activities better than th
strategy based on seeking cost leadership will require a reduction in th
value chain activities, or a reduction in the total amount of resources used

Primary Activities

Primary value chain activities include:

Primary Activity Description

Inbound logistics All those activities concerned with receiving and storing
materials
Operations The manufacture of products and services -
materials) are converted to outputs (e.g. products)
Outbound All those activities associated with getting finished
logistics
Marketing and Essentially an information activity - informing buyers an
sales products and services (benefits, use, price etc.)
Service All those activities associated with maintaining product
product has been sold

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strategy - value chain analysis Page 2 of 3

product has been sold

 

Support Activities

Support activities include:

Secondary Description
Activity
Procurement This concerns how resources are acquired for a business
negotiating with materials suppliers)
Human Resource Those activities concerned with recruiting, developing,
Management the workforce of a business
Technology Activities concerned with managing information process
Development and protection of "knowledge" in a business
Infrastructure Concerned with a wide range of support systems and
planning, quality control and general senior

Steps in Value Chain Analysis

Value chain analysis can be broken down into a three sequential

(1) Break down a market/organisation into its key activities under each o
model;

(2) Assess the potential for adding value via cost advantage or differen
activities where a business appears to be at a competitive disadvantage;

(3) Determine strategies built around focusing on activities where

sustained

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strategy - value chain analysis Page 3 of 3

Other Strategy Revision Notes:

Ansoff Growth Matrix | BCG Matrix | Balanced Scorecard - Intro
Business Planning - Intro | Business Planning - Process | Writing
Business Plan - Contents |
Benchmarking | Change Management - Intro  | Change Management
Change Management- Barriers |Change Management - Implementation
Competitor Analysis | Core Competencies | CSR - Intro  | CSR
Crisis Management - Intro | Crisis Management - Risk Management
Ethics - Introduction | Ethics - Issues and Examples |
GE Matrix |  McKinsey Growth Model | Global Business - Intro |
Global Business - Competitiveness | Global Business - Globalisation
Business Objectives | PEST Analysis | Porter's Five Forces | Resources
Strategic Audit | Stakeholders - Intro | Stakeholders - Interest & Power
SWOT Analysis | Value Chain Analysis | Vision | What is Strategy?
 

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