Shaklee business opportunity
Value chain approach developed by Michael Porter, he wrote a book competitive advantage which identified the value chain approach of the organization. A value chain approach is a systematic way of viewing the serious activities of the organization performs to provide a product to its customers. The value chain disaggregate an organization into its strategically relevant activities in order to understand the behavior of the organizations cost and its existing or potential source of differentiation.
An organization gains competitive advantage by performing primary and support activities, these activities are more important strategically.Every organization can be viewed as value chain approach. Value chain approach as a collection of value activities that are performed to design, produce, market, deliver and support its product. The basic categories of value activities can be grouped into two broad types.
They are as listed below: Primary activities Support activities Primary ActivitiesPrimary activities are those involved in the physical creation of the product and service in the organization. Its delivery of goods and service and marketing to ultimate buyer and its providing after sales support to buyer. These activities are supporting to organization that provide inputs or infrastructure to the business.Identifying Primary ActivitiesPrimary activities principally compose of five activities. They are as outlined: Inbound logistics Operations Outbound logistics Marketing and sales ServiceIdentifying of the primary value activities requires the isolation of activities that are technologically and strategically distinct in the organization.
They are five basic categories of the primary activities as listed below:Inbound Logistics Inbound logistic activities are associated with receiving, storing and dissemination inputs to the product like material handling, warehousing, inventory control, vehicle scheduling and returns to suppliers.Operations activities are associated with transforming inputs into the product form, like machining, packaging, assembly, equipment maintenance, testing printing and facility operations in the organization.Outbound LogisticsOutbound activities are associated with collecting, storing and physically distributing the product to buyers like finished products warehousing, material handling, delivery vehicle operation, order processing and scheduling. Marketing and sales activities are associate with providing a means by which buyers can purchase the product and inducting them to do so.
Marketing and sales activities are advertising, promotion, sales force, quoting, channel selection, channel relations and pricing strategy of the organization.Service activities are associated with providing service to enhance or maintain the value of the product. Service activities are like installation, repair, training, and parts supply and product assessment.The primary activities most deserving of further analysis depend on the particularIndustry.Identifying Support ActivitiesSupport value activities arise in any one of four activities like procurement, technology development, and human resource management and organization infrastructure. These categories can be identified or disaggregated by isolating technologically or strategically distinct activities. Identifying support activities often overlooked as sources of competitive advantage. Support activities are listed below: Procurement Technology development Human resource management Organization infrastructure Procurement activities are involved in obtaining purchased inputs like raw materials, purchased services and machinery or so on.
Procurement stretches across the entire value chain; therefore, it supports every activity-closely relating to purchased inputs of some kind. Different people typically perform with many discrete procurement activities in an organizationTechnology developmentTechnology development activities are involved in desiring the product like creating and improving quality of the products and service. Technological development is closely relating to innovation of new products and service of the organization. We shall tend to think of technology in terms of the product or manufacturing process. However, every activity of the organization performs and involves a technology.
Organization has developed own research and development department for performing to innovation of new product and service.Human Resource Management Human resource management activities are necessary to ensure the recruitment, training and development of employees in the organization. Every activity involves human resources. Therefore, human resource management activities control and mange across the entire chain.Organization InfrastructureOrganization infrastructure activities are such activities as general management, accounting, legal, finance, strategic planning and all others developed organization specific primary activities or support activities but essential to the entire chains operation.
USING VALUE CHAIN IN INTERNAL ANLYSIS
The value chain provides a useful approach to organization to guide and monitor systematically evaluation of the strengths, weakness, and opportunity and threatens. An organization provides to distinct value activities like primary and supporting activities. The strategist has identified key internal factors for further examination as potential sources of competitive advantage.
USING VALUE CHAIN IN INTERNAL ANLYSIS
The value chain provides a useful approach to organization to guide and monitor systematically evaluation of the strengths, weakness, and opportunity and threatens. An organization provides to distinct value activities like primary and supporting activities. The strategist has identified key internal factors for further examination as potential sources of competitive advantage.
EVALUTION OF STRATEGIC INTERNAL FACTORS
The major objective of internal analysis is a careful determination of an organization `s strengths and weakness. An internal analysis generates a long list of resources and capabilities have provided little to help in strategy formulation. Instead, internal analysis must identify and evaluate a limited number of strengths and weaknesses relative to the opportunities targeted in the organization `s present and future competitive environment.Strategist evaluates the key internal strengths and weaknesses. He has considered four important basic perspectives. They are as follows: Comparison with organizations past performance Stages of product /market evolution Comparison with the competitors Comparison with key success factors in the organizations industry Comparison with Past Capabilities and PerformanceStrategist has taken more care about the comparison with past capabilities and performance. However, the historical experience of the organization as a basis for evaluating internal factors.
Strategic Managers are most familiar with the organization internal capabilities and constraints. Therefore, they have been immersed over time in managing the organizations financial, marketing, production facilities, sales organization, financial capacity, control systems, and key personnel. Organization has developed own strategy on the basis Comparison with past capabilities and performance...
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