Research Trigger 3
Problem
How to develop the company value chain and structure as a company grows?
Learning objectives ·
What is value chain?
How to develop the company value chain and structure as a company grows?
Learning objectives ·
What is value chain?
1. What is value chain?
“The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.”Breakdown of value chain:
1. inbound logistics (warehouse, inventory management)
2. Operations (raw material to finished product)
3. Outbound logistics (Warehouse, delivery, user)
4. Marketing and sales (channel selection, advertising, pricing)
5. Service (customer service and repair)
2. Internal Process and company growth
Differentiation comes from:
1. the way individual activities are performed
.2. the way related activities link together
.3. the way the entire value chain is structured
How can a company support differentiation advantages from key success factors to value chain activites.
Individual activities --> customers: “is there anything in the way we do this activity (or
could do the activity) which creates special value for the customer?”
Porter brings this into
the next stage and identifies the ways to differentiate your company from
competitors and turn that knowledge into
company strategy.
Porter’s theory on competitive advantage: From Competitive advantage to corporate
Strategyhttp://people.tamu.edu/~v-buenger/466/Comp_Adv_to_corp_strat.pdf
Generic strategies:
Porter’s theory on competitive advantage:
Generic strategies:
3. External Factors effect on Value Chain
- ·Markets (customers): Demographic and socio-cultural considerations, such as who the customers are and what they believe, are critical to capturing market share. Understanding the needs and preferences of the markets is essential to providing something that will have a demand.
- ·Competition: Knowing who else is competing and how they are strategically poised is also key to success. Consider the size, market share, branding strategy, quality, and strategy of all competitors to ensure a given organization can feasibly enter the market.
- ·Technology: Technological trajectories are also highly relevant to success. Does the manufacturing process of the product have new technologies which are more efficient? Has a disruptive technology filled the need that was currently being filled?
- Supplier markets: Suppliers have great power as they control the necessary inputs to an organization's operational process. For example, smartphones require rare earth materials; if these materials are increasingly scarce, the price points will rise.
- Labor markets: Acquiring key talent and satisfying employees (relative to the competition) is critical to success. This requires an understanding of unions and labor laws in regions of operation.
- The economy: Economic recessions and booms can change spending habits drastically, though not always as one might expect. While most industries suffer during recession, some industries thrive. It is important to know which economic factors are opportunities and which are threats.
- The regulatory environment: Environmental regulations, import/export tariffs, corporate taxes, and other regulatory concerns can poise high costs on an organization. Integrating this into a strategy ensures feasibility.
Porter’s five forces:
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