2. WHAT IS VALUE
CHAIN MODEL?
VALUE CHAIN is the sequential set of
primary and support activities that an enterprise
performs to turn inputs into value-added
outputs for its external customers.
As developed by Michael E. Porter, it is a
connected series of organizations, resources, and
knowledge involved in the creation and delivery
of value to customers.
3. DEFINITION
John Del Vecchio, a value chain is “a
string of companies working together to
satisfy market demands”.
The value chain typically consists of one or
a few primary value (product or service)
suppliers and many other suppliers that
add on to the value that is ultimately
presented to the buying public.
4.
5. ADVANTAGES
A big advantage is that the value chain is a very
flexible strategy tool for looking at your
business, your competitors and the respective
places in the industry’s value system.
The value chain can be used to diagnose and
create competitive advantages on both cost and
differentiation.
It helps you to understand the organisation
issues involved with the promise of
making customer value commitments and
promises because it focuses attention on the
activities needed to deliver the value
proposition.
6. Comparing your business model with your
competitors using the value chain can give you a
much deeper understanding of your strengths and
weaknesses to be included in your SWOT analysis.
It can be adapted for any type of business –
manufacturing, retail or service, big or small.
7. DISADVANTAGES
It’s very strengths of flexibility mean that it has
to be adapted to a particular business situation
and that can be a disadvantage since, to get the
best from the value chain, it’s not “plug and
play”.
The format of the value chain laid out in
Porter’s book Competitive Advantage, is heavily
oriented to a manufacturing business and the
language can be off-putting for other types of
business.
8. Value chain can take a lot of work to finish a full
value chain analysis for your company and for your
main competitors so that you can identify and
understand the key differences and strategy drivers.
Many people are familiar with the value chain but
few are experts in its use.
9. The value chain idea has been adopted by supply
chain and operations experts and therefore its
strategic impact for understanding, analysing and
creating competitive advantage has been reduced.
Business information systems are often not
structured in a way to make it easy to get
information for value chain analysis
