porter's value chain presentation 1
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Porter’s Value ChainBorn in 1947Harvard professorWrote book,
Competitive Advantage
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Primary ActivitiesInbound LogisticsOperationsOutbound LogisticsMarketing and SalesService
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Inbound LogisticsThe receiving and warehousing of raw
materialsDistribution of raw materials to
manufacturing and operations
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OperationsProcess of transforming inputs into finished
goods and services
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Outbound LogisticsWarehousing of finished goodsDistribution of those finished goods to
customers or retail stores
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Marketing & SalesIdentification of customer needsDeploying product into marketplaceProcess of selling to customers
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ServiceSupporting customers after they buy
products and services
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Support ActivitiesProcurementTechnology DevelopmentHuman Resource ManagementFirm Infrastructure
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ProcurementThe purchasing of raw materials and inputs
needed to create the product
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Technology DevelopmentTechnology developments that support value
chain activities
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Human Resource ManagementActivities associated with recruiting, training,
hiring, and compensation
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Firm InfrastructureIncludes general and planning management,
legal, finance, accounting, public affairs, and quality management
Ex. A firm’s legal team consisting of lawyers to aid in lawsuits
Accounting department to keep track of financial figures
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Why this mattersProfits depends on how well firms execute
these activities in the value chainFirms that excel in a value chain activity is
said to have a competitive advantageCompetitive advantage is gained through
cost advantage
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Cost AdvantageReducing cost of individual value chain
activitiesReconfiguring the value chain
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10 Costs Drivers of Each Value Chain Activity1. Economies of Scale2. Learning3. Capacity Utilization4. Linkages among activities5. Interrelationships among business units6. Degree of vertical integration7. Timing of market entry8. Firm’s policy of cost or differentiation9. Geographic location10.Institutional Factors (regulation, union
activity, taxes etc.)
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Reconfiguring Value ChainStructural changes to an activity in a value
chain to reduce costs
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The Bigger PictureFirm’s value chain is part of a bigger value
chainCompetitive advantage also depends on the
management of connections with other firms’ value chains
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Citationshttp://www.12manage.com/methods_porter_v
alue_chain.htmlhttp://www.netmba.com/strategy/value-chain/http://en.wikipedia.org/wiki/
General_Motors_Chapter_11_reorganization