Strategic Value Chain Analysis for Competitive Advantage

The Value Chain Concept

The Value Chain concept refers to the sequence of a company's core activities and processes taken to sell a product or service. Each part includes a value associated with the final product, representing a part of the total product value.

If the client is willing to pay for the product or service and that price exceeds the cost of the various activities, the company generates a profit margin.

CV Provider - CV Enterprise - CV Channel - CV Buyer.

Basic Activities

Primary Activities

These are the activities involved in the company's production process from a physical standpoint, as well as transfer and after-sales customer care.

• Internal Logistics (Input Factors): Reception, maintenance, inventory control, and internal distribution of commodities.
• Production: Activities related to the physical transformation of the factors into products or services.
• External Logistics: Providing storage and physical distribution of finished products to customers.
• Marketing and Sales: Activities performed to achieve product sales.
• Post-Sales Service: Activities related to maintaining the conditions of use for the product sold.

Support Activities

These activities support the operation of the company.

• Provisioning (Procurement): The purchase of factors that will be used in the enterprise in a broader sense (raw materials, buildings, machinery, etc.).
• Development of Technologies: Activities leading to the procurement, improvement, and management of technology in the company, as well as the management of the process.
• HR Management: Human resources management (weas lokas).
• Company Infrastructure: Represents total support for the company rather than individual parts, such as planning, control, and computer systems.

Value Chain Activity Types

• Direct: Creation of value for the buyer.
• Indirect: Makes it possible to perform direct activities on a continuous basis.
• Quality Assurance: Activities that ensure the quality of other activities.

Interrelationships Between Activities

Optimization

One activity can reduce costs in other activities. For example, the optimization in the design of a product may lead to significant reductions in the production costs of that same product.

Coordination

Coordination can allow for important advantages. For example, the system philosophy known as "Just in Time" is based on the perfect coordination between activities.

Exploiting activities to obtain a competitive advantage depends heavily on the company's information systems; therefore, this becomes a key variable to achieve both coordination and asset optimization.

Value Chain Interrelationships and Analysis

The activities in the chain may generally exceed a deep analysis; therefore, they can be broken down into more specific activities. All of this depends on the level of detail desired. This is beneficial if there are different economies, when they build sources of advantage for the company, or where they make up a part of the cost of a generic activity.