VALUE CHAIN ANALYSIS
• Idea of value chain was suggested by Michel porter.
• Porter describes value chain as "internal process or activities that a company performs to design, produce, market, deliver, or to support its products.
• Value chain is a process by which firm
:check: identify & Analyse various activities that add value to the final products.
:check: Identify those activities which do not add value to the final products and eliminates those non value adding activities
VARIOUS ACTIVITIES UNDERTAKEN BY FIRM CAN BE DIVIDED INTO
• PRIMARY ACTIVITY:- INBOUND LOGISTICS, OPERATIONS, OUTBOUND LOGISTICS, MARKETING & SALES, SERVICE
• SECONDARY ACTIVITY:- PROCUREMENT, TECHNOLOGY DEVELOPMENT, HUMAN RESOURCE MANAGEMENT, INFRASTRUCTURE
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BENEFITS OF VALUE CHAIN ANALYSIS
:arrow_right: it helps in eliminating non value added activities and helps in creating special focus on value added activities thereby achieving cost leadership or product differentiation
:arrow_right: It assist in determining best way for developing higher level competitive performance.
:arrow_right: it helps in focusing core areas of business.
:arrow_right: it also facilitates the development of performance matrix
LIMITATIONS OF VALUE CHAIN ANALYSIS
:arrow_right: It cannot be easily applies to firms belonging to service industry.
:arrow_right: Often, it can be complicated and create frustration for management of firm.
:arrow_right: It is time consuming and expensive a a whole.
:arrow_right: It has a linear approach and ignore the concept of value networks.