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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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...Value Chain Analysis

 Why do companies  corporate profits exceed their competitors? How does one win a competitive advantage against its peers? The answers to these questions may be line in the value chain analysis. Value chain analysis is a process of considering activities that go to changing the input of a product or service in the output that is evaluated by the customer.

Porter Analysis

in1985, Michael Porter, a professor at Harvard Business School, introduced the prototype value chain in the book competitive advantage. He identified several key steps common to all value chain analyses and determined that there were core and supportive activities when they were implemented on optimal levels will create a value for their customers so that the value displayed by the customer exceeds the cost of creating that value resulting from a higher profit. Porter sets of frames in initial activities and ALDAMOTRCZ categories

 The primary activities to take inputs, transform them into outputs and deliver outputs to the client. Support activities play a catalytic role in key activities. When the company is effective in combining these activities to deliver a superior product or service, then the customer is willing to pay more for the product of the cost to make and deliver the product that leads to a higher profit margin.

 Our claim is working through an example of an asset management company. The objective of the customer is to achieve the highest possible return on investment under the guidelines and constraints identified by the customer. The main activities of the company include the following:

' Investment team (portfolio managers, analysts)-investment decision-making,

'operations and traders-ensuring that investments are in line with guidelines set by customer and business letter at the best price for implementation,

' Marketing and sales-buying customers,

' service (CRM-) provide all contact points for the customer.

Support activities include:

 ' Technology-the design of the trade and customer unit that is effective and efficient allows the team to provide the highest level of service and take the best investment decisions,

' Human resources-find and retain the highest level of talent In the company,

 ' Infrastructure-includes lawyers and risk managers, whose supervision is crucial to ensure customer guidelines, investment risk is controlled and the company operates within the systems developed by the SEC

What does all this mean?

When the company takes into account the value chain you need to consider the proposed value, or what distinguishes it from its competitors. Value chain analysis is designed to improve profits by creating a product or superior service so that customers are willing to pay more than one cost to create. But improving the value chain for optimization should not be the ultimate goal. Alternatively, the company should decide why it wants to improve its value chain in the context of its competitive advantage--how the company wishes to differentiate between Akranha. Common competitive advantage strategies include low-cost or specialization/differentiation in product or service.

' Low-cost provider the value of a string analysis focused on costs and how the company can reduce these costs.

' The analysis of the thematic value chain focuses on activities that create a unique product or differentiation in service.

Our claim is back to the example of our asset management. After the value chain is determined, the asset manager should identify its competitive advantage and follow-up on activities geared towards achieving those goals. In this case, the asset manager wants to follow a differentiation strategy by presenting the product that has a fixed, top quarter returns over three years. Based on the uniqueness factors identified by Porter, the company needs to focus on its policies and decisions and learn to differentiate it in terms of performance. Focusing on these programs, the main activities of the investment, Operations and Traders group, together with all specific support activities, can manage a product that achieves its distinct competitive advantage.

The bottom line

Value chain analysis is an extremely useful management tool that identifies activities that go to the creation of a superior product or service that is highly valued by customers. As a result of creating this high-value product is that customers are willing to pay a premium, which exceeds their next cost to make higher profits. The usefulness of this model, which Ansah Michael Porter, is often seen in his ability to divide productive work into different activity groups to strategically focus on management on what are truly useful activities and what creates value. It also focuses on a company to decide the vision a competitive advantage strategy which will pay products and services in the future. Supporting activities are validated in the process that creates an understanding that these activities, which are sometimes ignored, are an integral part of the value chain and the value proposition of the company.

What is a value chain analysis?

The value chain includes basic business activities. Such activities should be conducted at the optimum level if the organization is to gain any real competitive advantage. /Credit: King Guan Toh | Inventory

If you are looking for a way to get the edge of your competition, consider one of the business Aladaat in the most valuable business world: Value chain analysis.

The value chain analysis relies on the basic economic principle of advantage-the best corporate service in sectors where it has a comparative advantage over its competitors. At the same time, companies should ask themselves where they can provide the best value to their customers.

To conduct an analysis of the value chain, the company begins to identify each part of its production process and determine where the steps can be eliminated or made improvements. These improvements can either result in cost savings or improve productive capacity. The final result is that customers derive more benefit from the cheapest product, which improves the company's bottom line in the long run.

What is the value chain?

To understand how to perform a value chain analysis, business must first know what its value chain is. The value chain is a complete set of activities-including design, production, marketing and distribution-the companies go through to bring the product or service from pregnancy to delivery. For companies that produce goods, the value chain begins with the raw materials used to manufacture their products, and consists of everything that is added to them before they are sold to consumers.

The actual organization of all these activities so that they can be properly analyzed is called the value chain management. The goal of the value chain management is to ensure that those responsible for each stage of the value chain communicate with each other, to help ensure that the product is obtained in the hands of customers smoothly Webasra what can.

Porters value chain

Harvard Business School Michael E. Porter was the first to introduce the value chain concept. Porter, who also developed a five-strong model that employs many companies and companies to see how they can compete in the current market, first discussed the concept of the value chain in his book "Competitive Advantage: Creating and maintaining superior performance" (Free Press, 1985)

"Competitive advantage cannot be understood in view of a company as a whole," Porter wrote. "It stems from many separate activities undertaken by the company in the design, production, marketing, delivery and support of its products. Each of these activities can contribute to the development of the company's relative cost and provide a basis for differentiation. "

According to commercial marketing, Porter indicates that activities within an organization add value to the services and products produced by the company, that all of these activities should be run at the optimum level if the organization is to gain any real competitive advantage. If managed efficiently, the value obtained must exceed the cost of running it--for example, customers should return to the company and deal freely and willingly.

In his book, Porter said business activities could be divided into two categories: initial activities and support activities. The main activities include the following:

' Logistics Received: This refers to everything that is involved in obtaining, storing and distributing raw materials used in the production process.

' Operations: This is the stage where the raw products are transformed into the final product.

' Outbound Logistics: This is the distribution of the final product to consumers.

' Marketing and Sales: This phase includes activities such as advertising, promotions, organization of sales, choice of distribution channels, pricing, and customer relationship management from the end product to ensure that it targets the correct consumer groups.

' Service: This indicates the activities required to maintain the product's performance after its production. This phase includes such things as installation, training, maintenance, repair, warranty and post-sales services.

The support activities assist key functions and include:

' Procurement: This is how raw materials are obtained for the product.

' Technology development: Technology can be used throughout the board in the development of a product, including in the R&D phase, in how to develop and design new products, and automate processes.

' Human resources management: these are the activities involved in recruiting and retaining appropriate staff to assist in the design, construction and marketing of the product.

' Fixed infrastructure: This refers to the structure of the Organization and its administrative, planning, accounting and financial mechanisms and quality control mechanisms.

Goals and outcomes

Ideally, analyzing your value chain will help your company to identify areas that can best be optimized to maximize efficiency and profitability.

Ruth Campbell, first vice president of technical learning and application in non-profit economic development/business Daily News Professions, said that the best result of the value chain analysis should be the identification of the following components:

' Key short-and medium-term market opportunities in target value chains.

' Limiting factors for maximizing these opportunities (for small producers, women, youth, etc.).

' Improve strategies to address these constraints and maximize opportunities.

' Entities of the private sector, the public sector and civil society partners in achieving these strategies for scaling up.

' Recommendations on how to support these value chain strategies on a gender-equitable basis, promote improved nutrition (where appropriate), and include the poor and other marginalized groups.

At the other end of the spectrum, it is necessary to properly understand and implement the proposals that arise as a result of the value chain analysis.

"One of the most common misconceptions is that every restriction identified in the value chain analysis must be addressed," Campbell said. "Value chain analysis should be used to identify the most compelling priorities-the constraints that, if addressed, will produce the most beneficial effect-and/or constraints that can be addressed quickly and relatively easily to generate momentum for change among actors in the value chain."

Campbell also warned that if the analyst builds the analysis of your value chain, it's up to you as your business owner or manager to make most of his or her suggestions.

"Social norms exert a huge influence in many contexts on strategies that are considered possible or acceptable," Campbell said. "The analyst cannot impose on local actors a vision of VC development. Market players must embrace the vision if they want to invest their resources and change the way they operate. "

While the value chain analysis is a proven and tested tool, other analytical standards are designed to embrace the business model, which is not limited to consumer business. Specifically, the economic Opportunity market framework aims to help companies that respond quickly to changing market conditions and more extensive interaction with households and communities than traditional work carried out by value chain analysis. More information on this strategic analytical tool can be obtained from the US aid agency.

Value chain templates

There are many free online templates to help companies identify and analyze their value chains. Some templates can be found in the following locations:

' Value chain analysis template

' porters chain Analysis Template

' EDraw

' write latex

' Scoop.It Powerpoint Point

' Value Chain Analysis

' Free download manager Word template

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