Value Chain Analysis

Question 1

VALUE CHAIN ANALYSIS - DIAGRAM

Answer 1

Question 2

^{VALUE CHAIN ANALYSIS - DEFINITION}

Answer 2

A value chain identifies the relationship between the company’s resources, activities and processes that link the business together and create a profit margin.

It examines linkages between activities.

The value or margin is measured by the difference between:

• the cost of activities
• the sales revenue created by sales to customers

Question 3

VALUE CHAIN ANALYSIS - COST LEADERSHIP vs DIFFERENTIATION

Answer 3

Cost leaders should seek cost advantages.

Differentiators should seeks quality advantages.

Question 4

BRIEFLY OUTLINE THE PRIMARY ACTIVITES IN VALUE CHAIN ANALYSIS

Answer 4

• INBOUND LOGISTICS - activities concerned with receiving, storing and distributing the inputs to the products
• OPERATIONS - transforming the various inputs into final products
• OUTBOUND LOGISTICS - collecting! storing and distributing the final product
• MARKETING & SALES - informing customers about the products, persuading them to buy it and enabling them to do so
• SERVICE - after sales service such as installation, repairs, training and customer service

Question 5

BRIEFLY OUTLINE THE SECONDARY ACTIVITES IN VALUE CHAIN ANALYSIS

Answer 5

• PROCUREMENT - process of acquiring the various resource inputs to the primary activities
• TECHNOLOGY DEVELOPMENT - anything related to technological development
• HUMAN RESOURCE MANAGEMENT - recruiting, managingm training, developing and rewarding people within the organistaion
• INFRASTRUCTURE - systems of planning, finance, quality control, information management etc