Value Chain as Competitive Advantage
Unit 3 Assignment
GB570 Managing the Value Chain
Jerry Haenisch, PhD.
December 27, 2012
Value Chain as Competitive Advantage
Industries have in the earlier years concentrated on enhancing the supply chain activities in search of creating value. Nonetheless, optimizing these activities, only can lead to operative proficiency and not structural effectiveness. Contritely, when an organization, focus on growing their business through the value chain the organization has the opportunity to accomplish operative effectiveness and do not have to negotiate their operative competence. The value chain is designed to not only eliminate activities that do not augment value to their businesses but also grants incremental provision through their frame, human resource, technology, and investments.
The value chain is the groundwork for constructing competitive advantage, growth and expansion. (Putnaik & Sahoo, 2009). According to Walters & Rainbird (2007), the sheer existence of a competitive viewpoint does not warrant achievement, it is critical that businesses have value distribution sustainability. Review of Concepts
According to Lu & Hung (2010), the competiveness of a firm is dependent upon the competiveness of the value chain in which it belongs. The evaluation of the critical concepts that a value chain creates is vital to the competitive edge of the firm. A firm that effectively creates their value chain will have an gain on a firm that does not comprehend the significance of a value chain. An organization must appreciate the importance of their customers and recognize that they are a vital part of their value chain. This can be done by: • Creating and distributing superior customer value - this is achieved by creating/and or strengthening the connection between customer value (expectation and delivery) and organization financial performance and competitive advantage. • The customer’s value to the firm – primary focus is on the value outcome to the organization by providing competitive superior customer worth. • Customer and shareholder value - this theory is reached by the recognition that customer value pushes shareholder value. (Walters & Rainbird, 2007).
The value chain is a noteworthy business standard that can be beneficial to an organization or business. Michael Porter first presented the value chain as products and services that evolve from the moment they enter into the business until it exits. Although the main purpose of a business is to make a profit, the value chain is also a customer centered perception as well. (Shreiner, 2008).
According to Walters and Rainbird (2007), an effective value approach takes an organization beyond their margins. It also details recognition of core aptitudes necessary to contend, produce and transport customer value expectations and synchronization of the value production procedure. The added worth in the value chain also is a competitive matter as far as customer gratification is concerned. Competitive Advantage
Michael Porter used the term “value” to epitomize the contribution of each activity to create a competitive advantage. This is measured by the difference between the price in the market (what the consumer is willing to pay) and the operational costs and events. The solitary business profit is the total adjustments between the sum of the values of the various activities and their costs. (Guy, 2011).
Since we are in a global world, sustaining the competitive advantage is vital to a prosperous business. In order to safeguard the competitive edge it is imperative that a business have an effective supply chain management practice. Supply chain management basically means that a business incorporate their activities by refining their chain associations to maintain their competitive advantage. (Gilaninia, 2011).
Another technique that companies can gain...
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Lu, W. M. & Hung, S. W. (2010). Assessing the performance of a vertically disintegrated chain by the DEA approach-a case study of Taiwanese semiconductor firms. International Journal of Production Research, 48(4), 1155-1170.
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