Porter Value Chain Analysis

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PORTER '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 receiving and storing externally sourced materials. * Includes receiving, storing, inventory control, transportation scheduling. | Operations | * Manufacture of products and services. * The way that the resource inputs convert to outputs.…show more content…
* Includes general management, planning management, legal, finance, accounting, public affairs, quality management. | PORTER’S FIVE FORCES 1) Barriers to Entry * Large capital requirements or the need to gain economies of scale quickly. * Strong customer loyalty or strong brand preferences. * Lack of adequate distribution channels or access to raw materials. 2) Power of Suppliers High when: * A small number of dominant, highly concentrated suppliers exists. * Few good substitute raw materials or suppliers are available. * The cost of switching raw materials or suppliers is high. 3) Power of Buyers High when: * Customers are concentrated, large or buy in volume. * The products being purchased are standard or undifferentiated making it easy to switch to other suppliers. * Customers’ purchases represent a major portion of the sellers’ total revenue. 4) Substitute products Competitive strength high when: * The relative price of substitute products declines. * Consumers’ switching costs decline. * Competitors plan to increase market penetration or production capacity. 5) Rivalry among competitors Intensity increases as: * The number of competitors increases or they become equal in size. * Demand for the industry’s products declines or industry growth slows. * Fixed costs or barriers to leaving the
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