Value Chain Analysis

Question 1

Value Chain Analysis (and the categories)

Answer 1

• A tool used to identify which internal activities create value for a firm and which do not
• 2 categories: value chain activities (primary) and Support functions
• The value chain helps trace and understand the firms business level strategy

Question 2

Primary (value chain)

Answer 2

• Physical activities involved in a products creation, sale, distribution after sale
  1. Supply Chain Management: relationships with suppliers to maintain efficient flow of materials (ensures high quality supplies and maintains efficient flow for operations)
  2. Operations: build economies of scale and manage production efficiency (manufacturing high quality goods or develop flexible systems for cx needs)
  3. Distribution: Using low cost modes of transporting goods (provide accurate, timely delivery)
  4. Marketing: Utilize marketing aimed at high volume markets (investing in marketing that conveys a good image for the brand)
  5. Follow up Service: to reduce returns and encourage re purchasing (ensures cx satisfaction after sale)

Question 3

Support Functions

Answer 3

• provide the assistance necessary for primary activities to happen
  1. Finance: ensure positive cash flows and low debt costs (making long term investments in tech, innovative products)
  2. HR Management: ensure training, efficient hiring (creates value by recruiting good employees)
  3. IT management: developing and maintaining systems that support operations
  4. R&D: uses it to differentiate products/services according to market intelligence