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Unit 3/Lecture 20
BBM Semester VI
Value Chain analysis
:Unit 3
Introduction to International Business
strategy
Lecture -17 :Domestic to International
Business strategy
Lecture -18: International Personnel strategy
Lecture -19: International Operations strategy
Lecture- 20 : Value chain analysis
Question Bank
1. Enumerate the concept of value chain
analysis in the strategic decision making.
Give suitable examples
Context
Michael Porter published the Value Chain
Analysis in 1985 as a response to criticism
that his Five Forces framework lacked an
implementation methodology that bridged the
gap between internal capabilities and
opportunities in the competitive landscape.
This framework focused on industry
attractiveness as a determinant of the profit
potential of all companies within that
particular industry.
Context
However, significant differences in performance
exist between companies operating within the
same industry that can be explained either by
the company's participation in a successful
strategic group or by a firm's specific
competitive advantages.
Operations of firm can be thought of as a value
chain composed of series of distinct value
creation activities including production ,
marketing , sales , materials management , R
& D , Customer service, human resources ,
information systems , logistics and firms
infrastructure.
Basic concept : Value
creation
The way to increase profitability is to
create more value .
The amount of value a firm creates is
measured by the difference between its cost
of production and value that consumers
perceive in the product .
Normally companies charge slightly less
than the value that customer gives to the
product due to competition .
Value creation model
V= Value of product to an average consumer
P= Price per unit
C=Cost of production per unit
V-P
V-C
P-C
V
service
operations
marketing
outbound
& sales
n
logistics
logistics
inbound
gi
ar
m
primary activities