Chapter 1: Value Chain Basis

Question 1

What is Michel Porter’s Model of Value Chain

Answer 1

Balance of Time Quality and Costs

Question 2

What are the main goals of SCM

Answer 2

Maximise efficiency and minimise costs and risks

Question 3

What is Upstream and Downstream in SCM

Answer 3

Upstream: Process of getting materials to the manufacturer
Downstream: Process of getting products from manufacturer to customer

Question 4

What is the critical thinking towards Porter’s model

Answer 4

the model is a simplification
there should be changes made such as procurement as a primary activity

Question 5

What is the strategic objective of Value chain

Answer 5

Increase Value: differentiation (better than competition)
Reduce Costs: cost leadership (cheaper than competition)
=> to achieve a competitive advantage over rivals in the market

Question 6

How do you sustain competitive advantage

Answer 6

VRIO Model
Valuable
Rare
Hard to Imitate
Organised to exploit

Question 7

Why should you actively manage every step in your value chain

Answer 7

The profit of the company depends on margins of sold products/services
it is a result of the price customers are willing to pay and costs occurred

Question 8

What are the 2 important points when managing every step of your value chain

Answer 8

1) cost reducing activities
2) value added activities

Question 9

What is the product lifecycle

Answer 9

1) Introduction
2) Growth
3) Maturity
4) Decline => new product development