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InternalAnalysis–
ValueChainVicSaunders1WhatisaValueChain?Avaluechaindescribesthecategoriesofactivitieswithinandaroundanorganisation,whichtogethercreateaproductorservice.2ValueChainAstructuredframeworkforexaminingcostsandperformance.Itprovidesasoundbasisforinter-firmcomparisons.Allowscompaniestoimproveperformanceandeffectiveness.Identifyareasinwhichtheycanaddcustomervalue.3TheValueChainWithinanOrganisation4PrimaryActivitiesInboundLogistics–activitiesconcernedwithreceiving,storingandtheinternaldistributionofrawmaterials.Operations–themeansbywhichrawmaterialsareconvertedintothefinalproduct.OutboundLogistics–activitiesthatrelatetotheprocessofdeliveringtheproducttothecustomersuchasstorage,warehousingandtransportation.5PrimaryActivitiesMarketingandSales–involvesmakingsurethecustomersareawareoftheproduct.Service–includesactivitiessuchascustomerservice,after-salesservice,installationandtraining.6SupportActivitiesFirmInfrastructure–thisrelatestotheorganisationalstructure,cultureandsystems.HumanResourceManagement–recruitment,trainingandrewardingofstaff.TechnologyDevelopment–includesR&D,ITandprocessimprovements.Procurement–purchasingofvariousinputs.7UsingtheValueChainByusingthevaluechainafirmcangaincompetitiveadvantageby(Porter1998):Inventingneworbetterwaystodotheactivities.Combiningtheactivitiesinbetterways.Managinglinkagesbetterinthevaluechainandthevaluenetwork.8LimitationsoftheValueChainThemodelhasanumberoflimitations(Meeketal2023):Itisnoteasytouse,particularlyforserviceorganisations.Itisveryinwardlyorientated,ratherthanbeingfocusedontheexternalenvironment(inparticularthemarketandcustomers).Inmostindustriesasingleorganisationrarelyundertakesallthevalue-creatingactivitiesandthereforeanyanalysisshouldrecognisethewidervaluesystem.9WhatisaValueNetwork?Avaluenetworkisthesetofinterorganisationallinksandrelationshipsthatarenecessarytocreateaproductorservice.10ValueNetworkThevaluechaincanbeextendedtoincludesuppliersanddistributors.Itcanbeusedtoanalysetherelationshipbetweencompaniesandtoidentifywaysofaddingvalueinthesupplychain.Porter(1998)referstothisasthe‘valuenetwork.’Forexample,inarestaurantthequalityofingredientsisdeterminedbythegrower.Inessencethegrowerhasaddedvalue.11TheValueNetwork12UnderstandingtheCapabilities
inRelationtotheValueNetworkWhichactivitiesarecentralimportanttoorganisation’sstrategiccapability?Wherearetheprofitpools?Whatshouldbeoutsourced?Whomightbethebestpartnersinthepartsofthevaluenetwork?13StudentActivityInsmallgroupsprepareabriefingpaperon:Howawashingmachinemanufacturercouldimproveeachareaofthevaluechaintohelpgaincompetitiveadvantage.14PrimaryActivitiesInboundLogistics–carefulhandlingtoensurenodamagetoincominggoods,easeofaccesstothem,linkingofpurchasestoproductionrequirements.Operations–highquality,fewrejections,deliveryontime.Outboundlogistics–rapiddeliverywhereandwhencustomersneedit.Marketingandsales–welltrainedandmotivatedsalesforce,advertisingtiedtomarketsegments,goodliterature.AfterSalesService–rapidinstallation,speedyaftersalesserviceandrepair.15SupportActivitiesProcurement–purchasinghighqualitymaterials,regionalwarehousingoffinishedproducts.TechnologyDevelopment–developmentofuniquefeatures,newproducts,useofITtomanagelogisticsmosteffectively.HumanResourceManagement–highqualitytraininganddevelopment,recruitmentoftherightpeople,appropriaterewardsystems.FirmInfrastructure–investmentinsuitablephysicalfacilitiestoimproveworkconditions,supportfromseniormanagementincustomerrelations,investmentinITsystems.16PossibleExamQuestionAsaconsultantyouhavebeenasked,asaninitialstep,touseastructuredframeworktoexaminethecorecapabilitiesandperformanceofVirginAtlantic.Inparticularyouhavebeenaskedtoevaluatetheusefulnessofthevaluechaininanalysingtheirperformanceanddemonstratehowtheyhaveusedittoaddvalueineachoftheareas.17ExtendedKnowledgeForfurtherreadingontheVa
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