Value Chain as Competitive Advantage
Value Chain as Competitive Advantage
Unit 3 Assignment
Bobby Young-Mentgen
GB570 Managing the Value Chain
Pricilla Aaltonen
Kaplan University
September 25, 2012
Value Chain as Competitive Advantage
Customer-centric businesses focus on consistently delivering a differentiated experience designed to satisfy the customer. The ultimate goal is to sustain competitive advantage in the marketplace. The purpose of this paper is to demonstrate why an effective value chain creates competitive advantage.
Review of Concepts
Value Chain
The value chain is a concept developed by recognized Harvard business management expert Michael Porter in his book "Competitive Advantage (1985)." It breaks up the various elements of producing and delivery value to customers into key components. The development of value for the customer begins with inbound logistics, with subsequent components that include operations, outbound logistics, marketing and sales, and customer service. The culmination of optimizing performance in each of these key elements is the establishment of product margin, which is the difference between what the market will pay for a product and the cost basis for the provider (Iyas et all, 2007). Porter (1985) identified firm infrastructure, human resources management, technology development and procurement as key support elements of the value chain. In-depth customer and industry research, value chain analysis, and effective linkage of the stated elements making up the value chain lays the groundwork for creating Porter’s two competitive advantages: differentiation advantage and cost advantage (1985).
Competitive Advantage
Competitive advantage means a company is performing better than rivals by doing different activities or performing similar activities in different ways. It can give a company an edge over competitors, along with an ability to generate greater value for the firm and its shareholders. Porter (1985) insists there are two types of
Unit 3 Assignment
Bobby Young-Mentgen
GB570 Managing the Value Chain
Pricilla Aaltonen
Kaplan University
September 25, 2012
Value Chain as Competitive Advantage
Customer-centric businesses focus on consistently delivering a differentiated experience designed to satisfy the customer. The ultimate goal is to sustain competitive advantage in the marketplace. The purpose of this paper is to demonstrate why an effective value chain creates competitive advantage.
Review of Concepts
Value Chain
The value chain is a concept developed by recognized Harvard business management expert Michael Porter in his book "Competitive Advantage (1985)." It breaks up the various elements of producing and delivery value to customers into key components. The development of value for the customer begins with inbound logistics, with subsequent components that include operations, outbound logistics, marketing and sales, and customer service. The culmination of optimizing performance in each of these key elements is the establishment of product margin, which is the difference between what the market will pay for a product and the cost basis for the provider (Iyas et all, 2007). Porter (1985) identified firm infrastructure, human resources management, technology development and procurement as key support elements of the value chain. In-depth customer and industry research, value chain analysis, and effective linkage of the stated elements making up the value chain lays the groundwork for creating Porter’s two competitive advantages: differentiation advantage and cost advantage (1985).
Competitive Advantage
Competitive advantage means a company is performing better than rivals by doing different activities or performing similar activities in different ways. It can give a company an edge over competitors, along with an ability to generate greater value for the firm and its shareholders. Porter (1985) insists there are two types of
References: Guy, A. (2011). Entrepreneurship and the value chain: Importance, risks and suggestions. Investopedia.com(2012). Terms: Competitive advantage. Retrieved September 24, 2012 from http://www.investopedia.com/terms/c/competitive_advantage.asp#ixzz27RTWPZCE. lyas, R., Mohammed, Banwet, D. K., & Shankar, R. (2007). Value chain relationship: A strategy matrix Porter, M.E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York Walters, D., & Rainbird, M. (2007). Strategic operations management: A value chain approach. New York: Palgrave Macmillan. Zhang, H. (2010). Research Hewlett Packard through its value chain. International Journal of Business and Management, 5(8), 179-190.