Value chain

Question 1

What is the value chain?

Answer 1

Uses activities rather than traditional function departments to describe the business

Emphasizes that it is activities which create value and incur costs

Question 2

What are primary acitivities?

Answer 2

The ones which customers interact with directly, can “see” the value being created

Question 3

What are the primary activites?

Answer 3

Inbound logistics
Operations
Outbound logistics
Delivery
After sale

Question 4

What do secondary activities do?

Answer 4

Support the primary activities

E.g. HR should support the operations if employees aren’t productive enough, they should be fired

Question 5

How can value chain analysis be used?

Answer 5

The board can see which activities create value so focus on improving this through it’s performance measurement system

Question 6

Explain the idea of a “chain” linking activities?

Answer 6

Value is created through a chain linking activities together

There must be a flow of information between the different activities

Requires good communication among the activities

Job descriptions should be activities rather than a functional area