Value Chain Analysis
QUESTION
Michael Porter’s value chain analysis describes how particular resource categories contribute to the firm’s strategic performance. Demonstrate how this can be done using examples from an organization of your choice.
INTRODUCTION
Michael Porter introduced the value chain analysis concept in his 1985 book the Competitive Advantage. Porter suggested that activities within an organization add value to the service and products that the organization produces and all these activities should be run at optimum level if the organization is to gain any real competitive advantage (Lynch 2003). If they run efficiently the value obtained should exceed the cost of running ie customers should return to the organization and transact freely and willingly. Porter suggested that the organization is split into primary activities and supportive activities.
According to Pathania - Jain 2001, the value chain frame work of Porter is an interdependent system or network of activities, connecte d by linkages. When the system is managed carefully the linkages can be a vital source competitive advantage.
INBOUND LOGISTICS
This refers to all activities related to receiving goods from suppliers, decisions about the transportation, scheduling, storing the goods as inventory managing the inventory and making the inputs ready to use for the productions.
Delta engaged in contract farming where they provide inputs to farmers in the production of sorghum so that they are assured of continuous availability of their key resource. Delta has a stake in Kwekwe Malting which produces barley maltings which is a key input in the production of opaque beer. Their relationship with Kwekwe Malting will ensure a reliable and consistent supply of the raw material to facilitate continuous production thereby minimizing bottlenecks in the production process.
Engaging Kwekwe Malting as a sole supplier acts as a cost saving strategy as they buy at concessionary prices. Having access to cheaper raw
Michael Porter’s value chain analysis describes how particular resource categories contribute to the firm’s strategic performance. Demonstrate how this can be done using examples from an organization of your choice.
INTRODUCTION
Michael Porter introduced the value chain analysis concept in his 1985 book the Competitive Advantage. Porter suggested that activities within an organization add value to the service and products that the organization produces and all these activities should be run at optimum level if the organization is to gain any real competitive advantage (Lynch 2003). If they run efficiently the value obtained should exceed the cost of running ie customers should return to the organization and transact freely and willingly. Porter suggested that the organization is split into primary activities and supportive activities.
According to Pathania - Jain 2001, the value chain frame work of Porter is an interdependent system or network of activities, connecte d by linkages. When the system is managed carefully the linkages can be a vital source competitive advantage.
INBOUND LOGISTICS
This refers to all activities related to receiving goods from suppliers, decisions about the transportation, scheduling, storing the goods as inventory managing the inventory and making the inputs ready to use for the productions.
Delta engaged in contract farming where they provide inputs to farmers in the production of sorghum so that they are assured of continuous availability of their key resource. Delta has a stake in Kwekwe Malting which produces barley maltings which is a key input in the production of opaque beer. Their relationship with Kwekwe Malting will ensure a reliable and consistent supply of the raw material to facilitate continuous production thereby minimizing bottlenecks in the production process.
Engaging Kwekwe Malting as a sole supplier acts as a cost saving strategy as they buy at concessionary prices. Having access to cheaper raw