Value Chain Analysis

Topics: Supply and demand, Amazon.com, Supply chain management Pages: 8 (2679 words) Published: August 6, 2014
Value Chain Analysis
Value chain analysis is a method to review all the activities in an organization that contribute to maximizing competitive advantage and customer delight while identifying non value added waste and costs in the value chain process (Walter & Rainbrid, 2007). The purpose of this paper is to analyze Amazon’s value chain. Amazon’s mission statement reads as “our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” This paper will provide facts to analysis if this mission has been accomplished (“About amazon,”). The company was founded in 1994 by Jeffery P. Bezos. In the early years of Amazon they were mostly known for selling books. The idea behind it was that traditional brick-and-mortar stores could not hold more than a few hundred thousand books, whereas Amazon being an online store could hold an infinite amount of books (“History of amazon.com,”). Since its early days of being an online book store Amazon as grown to become a fortune 500 company with a global reach. Amazon operates in over 10 countries worldwide with over 88,000 employees (“Inside amazon,”). Amazon is one of the most visited sites in the world, with over 500,000,000 monthly visitors, and over 100 million active members (“Top 15 most popular websites”, 2014). Amazon’s growth is deeply rooted in its value chain. Value chain represents the internal activates a firm engages in when transforming inputs into outputs. In this paper Amazon’s value chain processes will be reviewed. By understanding which activities Amazon engages an analysis can provide the reasons that Amazon has an effective competitive advantage and an increasing number of customer delight among its industry rivals. In 1985 Porter describes the value chain as the internal activities firms engage in to produce goods and services, these activities have been broken down into primary activities and support activities. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities include firm infrastructure, procurement, human resource management, and technology (Jurevicius, 2013.) The value chain can also be view as the combination of the demand and supply chain. The demand chain deals with the needs of its customers. Demand chain is defined as the complex web of business processes and activities that help a firm understand, manage, and create consumer demand (Walters & Rainbird, 2007). The supply chain deals with the relationship between the company and its suppliers. The supply chain is defined as the steps taking to get goods or service from the supplier to the customer. Since the demand and supply chain add value to the company, too fully analyze Amazon value chain, this paper will also include both supply and demand chain analysis. Demand Chain Analysis

As stated above the demand chain are the processes and activities that come together to help a firm understand, manage, and create consumer demand. This section will analyze Amazon’s demand chain. It will identify the customers, market, wants and needs, market opportunity, and value drivers. Amazon’s understanding of its demand chain has been critical to its success over the years. Amazon’s demand chain as ensure a level of customer satisfaction highest in its industry. Amazon’s customer satisfaction rating it at 88 percent, this is above the industry average rating of 78% and of its leading competitors (“ACSI”,).

Identification of Customer, Market, Wants and Needs
Amazon is an e-commerce business, which means it has a wide range of customers. The company’s target market is all users that shop online. These are the individual that don’t have time to shop at traditional stores. Also many of Amazon users are unable to find their desired product in their local area. With the new fast pace world Amazon customers are accustom to using technology...
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