Value chain analysis

• Consists of the conditions and resources
which are internal
• Controllable
• determines the relative strengths and
weaknesses of the firm
• sound internal environment helps create
competitive advantage

Elements
Organizational
goals and
policies
Organizational
Resources
Organizational
Structure
Organizational
Culture

• Analysis of internal resource and
capabilities of an organization
• starts with
– how well the current strategy is working?
– what is our current situation?
– what are our strength and weakness?

Define vision,
mission,
goals and
strategies
Strength and
weakness
analysis
Identification
of unique
resources
Identify
core
competency
Locate
strategic
advantage

• Attempts to understand how a business
creates customer value
• Understand which parts of operations creates
value and which does not
• Shows how a product moves from the raw
material stage to the final customer

“A value chain is linked set of value-creating
activities that begin with basic raw materials
coming from suppliers, moving on to a series of
value-added activities involved in producing and
marketing a product or service, and ending with
distributors getting the final goods into the
hands of the ultimate customer.”
- Wheelen and Hunger

SUPPORT
ACTIVITIES
PRIMARY ACTIVITIES
Firm Infrastructure
Procurement
Human Resource Management
Technology
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Service

Identification of Activities
Allocation of Cost
Identification of the activities
that differentiate the firm
Evaluation of value chain

USES OF VALUE CHAIN
ANALYSIS:
• The sources of the competitive advantage of a firm can be seen from
its discrete activities and how they interact with one one another.
• The value chain is a tool for systematically examining the activities of
a firm and how they interact with one another and affect each other’s
cost and performance.
• A firm gains a competitive advantage by performing these activities
better or at lower cost than competitors.
• Helps firms to stay out of the “No Profit Zone”
• Presents opportunities for integration
• Aligns spending with value processes

Value Chain & Value System of TATA
motors
Inbound
Logistics
Operations Marketing Service
Outbound
Logistics
Suppliers , Contractors
SAP , VCM
SAP , CRM - DMS
Strategic Alliances
Transporters, Convoy Drivers
Association
Dealer Network, Marketing
Research Firms, Vehicle
Financing
Regional Warehouses, Dealer
Workshops, Distributors, TASS

Value chain analysis

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