Value Chain Analysis

A. Primary and support activities of a Value Chain Analysis

Definition of Value Chain Analysis

- The value chain analysis means of increasing customer satisfaction and managing cost more effectively. This is a systematic approach to examining the development of competitive advantage. Value chain analysis is particularly useful tool for looking at competitors, and identifying sources of competitive advantage

Primary activities of Value Chains Analysis are directly concerned with the production or delivery of a product of services and consist of:

1. Inbound Logistics Ð'- refer to activities such as receiving, storing and distributing the inputs to the product or service. E.g. materials handling and stock control

2. Operations Ð'- conversion of the various inputs into final product or services

3. Outbound Logistics Ð'- to collect, to provide storage and the distribution of the product. E.g. warehousing and transport

4. Marketing and Sales Ð'- promotion of product or service to consumers. E.g. advertising costs and selling and distribution costs

5. Service Ð'- activities which enhance and maintain value of the product. E.g. training and installation

The primary activities are supported by secondary activities which help to improve the efficiency and effectiveness of primary activities and consist of:

1. Firm's Infrastructure Ð'- consist of the organizational structure, the system of planning finance and quality control

2. Human Resource Management Ð'- it involves the recruitment, training, remuneration and incentives and development of the manpower of the organization

3. Technology