An analysis of porters value chain - 1188 Words

To analyse the specific activities through which firms can gain a competitive advantage, it is useful to model the firm as a chain of value creating activities. For this purpose, Porter identified a range of interrelated generic activities common to a wide range of firms. The resulting model is known as the value chain. According to Porter (1985), Competitive Advantage arises out of the way firms organise and arrange discrete activities. Through using the Value Chain, the activities performed by a firm competing in a particular industry can be grouped into categories as shown in the model below: Upstream Activities Downstream Activities Porter distinguishes between primary activities and support activities. Primary activities are†¦show more content†¦As mentioned, gaining competitive advantage requires that a firms value chain be managed as a system rather than a collection of separate parts. Reconfiguring the value chain by relocation, reordering or even eliminating certain activities can often lead to a major improvement in competitive position. Upstream and Downstream A firms value chain links to the value chains of the upstream suppliers and downstream buyers. The result is a larger stream of activities known as the value system. The development of a firm specific competitive advantage not only depends on the firms value chain but also on the value system of which the firm is a part. In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organisations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates. Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use itsShow MoreRelatedPorter Value Chain Analysis882 Words   |  4 PagesPORTER S VALUE CHAIN ANALYSIS The porter’s value chain is a model that helps to analyze specific activities through which firms can create value and competitive advantage. There are two activities in value chain which are: Primary activity – directly concern with creating and delivering a product. Support activities – not directly involved in production, may increase effectiveness or efficiency. PRIMARY ACTIVITIES | DESCRIPTION | Inbound Logistic | * Concerned with receivingRead MoreValue Chain Analysis By Michael Porter Essay2186 Words   |  9 PagesWhat is a Value Chain? A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage Value chain analysis is a strategic analytical and decision-support tool that highlights the bases where businesses can create value for their customers. The frameworkRead MoreAnalysis Of Michael Porter s Value Chain Essay1740 Words   |  7 PagesDuring 1985, Michael Porter, one of the most important American economists, introduced one of his most famous theories: â€Å"The Value Chain†. Through this model is possible to describe an organization like a set of processes. 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The value chain analysis was popularized by Michael Porter in 1985. Porter investigated the sequence of activities that are required to bring a product or service from concept through different stages of production, distribution, and to the final customer. Porter wroteRead MoreHilti cut or Fasten?1339 Words   |  6 PagesThis case review was executed about a case study that was discussed in class on the operations of Hilti and its surroundings – Hilti is a global corporation based in Lichtenstein that is a market leader in drills, saws and fastening products. The analysis looks at the development of Hilti ever since it was founded, and the different strategies which have been implemented to get them to where they are now. For a company that has been very successful which is now going thr ough a period of recession