This assignment is intended to ensure you understand some of the basic terms used in this course.
The value chain, made by Michael Porter, is really important to see how a company structure is created. The value chain is constituted by two parts: support activities (firm infrastructure, human resource management, technology development, procurement) and primary activities (inbound logistic, operations, outbound logistic, marketing and sales, service). (Johnson et al. 2011, p.97-99)
Porter’s model aims to enable managers not only to understand their industry environment but also to shape their firm’s strategy. The five competitive forces are threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing competitors. “As a rule of thumb, the stronger the five forces, the lower the industry’s profit potential- making the industry less attractive to competitors. The weaker the five forces, the greater the industry’s profit potential – making the industry more attractive” (Rothaermel, 2013, p. 65). It is recommended that managers position their company in an industry in such a way that relaxes the constraints of strong forces and
“Competitive Advantage introduces the concept of the value chain, a general Framework for thinking strategically about the activities involved in any business and assessing their relative cost and role in differentiation”. Michael Porter, (1985).
Effective value chain as a competitive advantage can contribute significantly to the prosperity of a firm in the competitive arena, but it can cause dire situations if not operated properly (Guy, 2011). However, there are conflicts among companies as to how stakeholders think they gain competitive advantage. Porter (1996) suggests: A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at lower cost or do both.
Perreault, Jr., W.D., Cannon, J.P., & McCarthy, E.J. (2011). Basic Marketing: A Marketing Strategy Planning Approach [University of Phoenix Custom Edition eBook]. New York, NY: McGraw-Hill. Retrieved from University of Phoenix, MKT/421 website.
Keane (2008) stated to design, manufacture, promote, offer and facilitate its product or services, all organization engages in some activities. All of these activities of an organization are shown through the use of value chain process. The manner in which organization performs its varying activities along with the firm’s value chain mirrors the organization’s background, strategy along with the way in which the organization executes its strategy. Ponte (2008) stated that the analysis of value chain of an organization is used to develop the organization’s competitive strategies along with formulation the connected and interconnectedness between all the organizational activities that formulate value. Francis, Simons, and Bourlakis (2008) stated that value chain analysis is a helpful tool as an organization looks to attain competitive advantage. Furthermore, Rieple and Singh (2010) stated that a value chain is a useful tool in conceptualizing the varying activities
Michael. Porter defines strategic position as attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways. He maintains that strategic position emerges from three distinct but not mutually exclusive and often overlapped sources, ie: variety-based positioning, needs-based positioning and access
Even though I believe Google’s management system to be effective and the article’s explanation of the system to be credible and valid, I do not believe it will fit the culture of my company. Working in the restaurant industry, our employees are not as technically minded as the employees of Google. From experience, direct management and more guidance are needed in a customer-service directed atmosphere. While my boss may find the surveys and employee improvement strategies to be helpful, Google’s exact system is not comparable to the restaurant industry.
Alfred Chandler(1963) defines strategy as ‘ the determination of the long-run goals and objectives of an enterprise and the adoption of courses of action of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals’. And Michael porter(1996) sees it as ‘Competitive strategy is about being different. It means deliberately choosing different set of activities to deliver a unique mix of value’.
Strategy can be defined as being different from one’s competitors, finding the race to operate and accomplished it. According to Michael Porter (1996), while becoming better at what you do is desirable, it will not benefit you in the long run because it is something other competitors can also do. Strategies for organizations are originally developed by Michael E. Porter in 1979 by introducing the five forces model. A company can identify the industry profitability and attractiveness by analyzing the five forces of Porter (Johnson et al., 2008). And then a reasonable strategy can be set up in line with the strengths and the weakness of an organization is able to create a plan for a stronger position for the organization within its
With the idea of activity mapping, Porter (1996) builds on his ideas of generic strategy and the value chain to describe strategy implementation in more detail. Competitive advantage requires that the firm's value chain be managed as a system rather than a collection of separate parts. Positioning choices determine not only which activities a company will perform and how it will configure individual activities, but also how they relate to one another. This is crucial, since the essence of implementing strategy is in the activities - choosing to perform activities differently or to perform different activities than rivals. A firm is more than the sum of its activities. A firm's value chain is an interdependent system or network of activities, connected by linkages. Linkages occur when the way in which one activity is performed affects the cost or effectiveness of other activities. Linkages create tradeoffs requiring optimization and coordination.
“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).
Google Inc. which was founded by founded by Larry Page and Sergey Brin in 1998 is a multinational technology company. The firm has headquarters in California, United States. Presently, the business hoses several online services like Gmail. Initially, the company operated solely as an online search firm, but it currently offers over fifty internet products along with services. In fact, it is the most popular and largest search engine globally. Over the 20 years of its operations, the tech giant has turned out to be synonymous when it comes to innovation and is well-known due to its human