The Value Chain Flashcards
What are the main changes and developments that have accelerated recently in the media industry?
Consumer behavior
Technological advancements
Regulation
‘Strategy is situational and the appropriateness of any given approach will depend on the industry context.’
Ham Brick (1983)
Strategy needs to be studied within ‘the marco environment, the technological, competitive and consumer context of the media organisations.’
Kung (2008, p.17)
What is the starting point for analysis of a firm’s environment according to Porter?
The dynamics of the industry sector. The media industry is incredibly complex. For each industry sector, whilst sharing commodities, there are environmental changes as well as unique competitive and change forces.
What perspective does Porter take on the meaning of the word ‘value’?
An economic perspective. Porter assumes that organisations employ a variety of resources to create products and services.
‘Successful companies manage to combine those resources in a way that creates products and services with more value than the combines value of the resources used. Thus, surplus value represents profits or earnings.’
Kung (2008, p.19)
What does the Value Chain do?
The Value Chain disaggregates the activities of a firm into sequential stages, from supply to demand. These are ‘meta’ tasks involved in the creation and distrubution of a firm’s goods and services.
What does the Value Chain analyse? (in the traditional sense)
It analyses each activity from the perspective of the ‘value’ it adds to the final product or service (known as the ‘margin’) The more competitive the value chain of an organisation, the more the overall product’s value exceed the sum of its parts, the more overall margin can be realised as profit.
What does the Value Chain analysis contribute greatly to within an organisation?
Strategic decision making.
What does an industry’s value system link?
The individual value chains of a different player in a sector into a system or ‘chain’ of activities from originator to sector.
What kind of business is the Value Chain embedded in?
An ‘upstream and downstream’ business.
How does the Value Chain break down activities of an organisation?
The Value Chain is the bridge between activities of strategy formulation and implementation. It breaks down an organisation’s value, creating activities into strategically relevant stages allowing each one to be analysed and the behaviour of costs and potential sources of differentiation to be uncovered.
