L3 (last part)Porters Value chain Flashcards
What does PVC model show?
Porter’s value chain model (1985) helps the business to analyse its major activities and try to understand exactly where value is added from the inputs that are transferred in to outputs. i.e. where is the value added when we transform inputs to ouputs? Value added is the difference in the price and cost to produce
what does PVC help you to do?
- Helps us understand what the organisation actually does!
- Helps to identify which activities within the organisation are key to competitive advantage
- Identifies any activities that add little value to the organisation/are inefficient.
What can we then do following a PVC analysis?
We can then consider:
- Strategies to improve the value adding activities
- How to reduce the cost of/eliminate non-value adding activities
What are the two parts of PVC?
- Primary activities 2. Support activities.
What are primary activities and what are they?
Primary activities are to do with the core product/service that you sell. I.E. to do with making and selling the product.
They are:
- Inbound logistics
- Operations.
- Outbound logistics
- Marketing and sales.
- Service.
What are the support activities and what are they?
Support activates help efficiency of primary activities.
They are:
- Firm infrastructure
- HR management
- Technology
- Procurement
what is the role of the support activities?
They are there to support the primary and make them work better.
What does the PVC diagram look like?
What is inbound logistics?
This is the first thing you do as a manufacturing co, which is receiving and holding raw materials and other supplies. E.g. receiving in things like metal, rubber etc for cars. Storing them in the warehouse.. And when necessary issuing them to production
It is raw material handling. I.e making sure you have enough and they are not damaged.
What is operations?
This is where you transfer inputs to outputs. I.e. you take your raw materials and covert them to your final product. E.g. for Ford its where thy make them on the manufacturing line.
What is outbound logistics?
This is where you finish production, and have to manage/store the finish goods before they are sold, and then distributing them to your supply chain.
e.g. for Ford storing the cars, and then shipping them to dealerships. (by boat or however else).
what is the sales and marketing stage?
- The interface between operations and the customer
- Making the goods known and available to the market
This is about encouraging the customers to buy your product.
Ford at some point need to convince the general public to buy your cars. It is advertising.
What is the service stage?
This is anything you do for the customer after they bought your product. It is anything after the point of sale. You also need to be able to deal with queries and complaints.
e.g. for Ford they have to offer servicing. People wont buy car unless they get this going forward at a reasonable price and it is easy.
What is the procurement stage?
Procurement is finding anything you need as a co to buy, at the best price etc. This involves finding and choosing suppliers, and this is one of the biggest parts.
Procurement isnt just raw materials but making sure you buy anythign that you need to buy. For e.g building etc. Needs to be efficient or you have problems down line with primary activities.
What is the technology support activity?
- Purchase and deployment of all kinds of technology within the organisation
- Includes automation, IT networks, MIS, etc.
How do you use it and do you use it well in your org? Can also think about how tech affects your marekting as you may use social media for online advertising etc.
E.g. Ford use it in their assembly lines.
