Strategic Value Chain Analysis

Cost has traditionally being a major influence on all business as all businesses desire to achieve maximum efficiency as it is a vital factor for businesses in order to reach the ultimate goal and success. Businesses sees cost as the key value to success and aims to become as much cost efficient as possible, by implementing a cost-leadership style approach to the operations variable cost or fixed cost ,while maintain the expected profit margin, business is able to gain a competitive advantage over their competitors in their target market. This is called cost-based competition. By determining the break-even point and applying cost saving strategies, to reducing cost, businesses who apply cost-based competition in their operations is able to maximize the profits and lead business to success.

A cost leadership strategy focuses primarily on “producing products and/or services that are the lowest in the industry” (Turban, Rainer, & Potter, 2003). This type of organization forms business alliances that support their inventory management through computers and computerized purchasing. A differentiation strategy focuses on being unique within the industry and provides high-quality products at a competitive price (Turban, Rainer, & Potter, 2003). These types of companies “provide their customers with a

Pearce, J. A. II, & Robinson, R. B. (2009). Strategic management: Formulation, implementation, and control (11th ed.). [University of Phoenix Custom Edition e-text]. New York: McGraw-Hill. Retrieved August 20, 2011, fr

“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).

A value chain analysis is a strategic analysis of an organization that uses value creating activities (Dess, McNamara, & Eisner, 2016, p. 76). The value chain analysis describes a company’s activities and relates them to an analysis of the competitive strength of the company

Differentiation and cost leadership are two strategies chosen because they are the most common between the different companies. Amazingly these leading organizations from different industries are using the same competitive strategies and tactics. The two competitive strategies may be the reason both organizations are leading within their industries. “Differentiation is a type of competitive strategy with which the organization seeks to distinguish its products or services from competitors” (Valdehueza, 2009).

Value chain analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost. It is a systematic approach to examining the development of competitive advantage. The most basic breakdown of primary functions includes inbound logistics, operations, outbound logistics, sales and marketing and service. People should use the other models and frameworks within this software to further differentiate between, and add to, these domains. Product Innovation is one area that is not normally included in the de jure model but is often included in the de facto model. Value Chain Analysis describes the activities that take place in

With help of the following value chain I analysed the activities of the company. It connects the company analyses and the strategy development – we can also see the strengths and weaknesses of the company which we can use to moderate a corporative strategy for the company profile.

The purpose of this report is to analyze the strategic situation of Malaysian Airline (MAS). The company was in 1963 it is a government owned airline, the airline operates both transatlantic and transpacific flights. Mas has received more than 100 awards since it started operating such as the leading airline (2011) Asia’s leading business class airline (2010) as well as the five star airline (2012). This has helped the company to build up its image as the top airline in Malaysia. They are a number of strategies which MAS can use to make the company to be more profitable strategy implementation which is the process used to overcome the external factors (Hambrick, 2007). A company can get affected if the company management

Value chain is an approach to know how an item or activities create value for consumers. The most of value provides to consumers, the most of competitive advantage an organization build. In this analysis, value chain model has separated into primary and support activities. Primary activities are included in the physical creation of the item and service. On the other hand, support activities give the inputs and infrastructure that enable the primary activities to happen. This value chain model can be refer to below figure 5.

If a firm sustain profits that exceed the industry average, said firm is said to have a competitive advantage. The goal of any given business strategy is to achieve a competitive advantage. Moreover, the goal of a successful business strategy is a sustainable competitive advantage. The question is how does a firm create that competitive advantage? According to Michael Porter, to achieve a competitive advantage, a firm must perform one or more value creating activities in a way that creates more overall value than competitors (1985). The purpose of this paper is to examine how the value chain creates competitive advantages. It will review the concepts of the value chain, the inter-relationship of these concepts as well as provide examples of companies that were successful and unsuccessful in the integration of these concepts.

The business of ecommerce is rapidly increasing, minute by minute. Companies are finding ways to deliver their products to their customers quicker and easier. With this demand in progress, gaining an advantage is an essential key element to the companies success. To distinguish these viable advantages, Michael Porter created value chain analysis, which views a firm as a series of business processes that each add value to the product or service (Baltzan). The value chain analysis is a valuable source for regulating the greatest possible value for consumers. This topic will be further discussed with two major leading companies, Amazon and EBay. The increase in ecommerce will have an impact on the economy as well.

The value chain analysis (shown in appendix) was also generated by Michael Porter. This model is referred to “identifying ways to increase the efficiency of the chain” (Investopedia, n.d.). Furthermore, the overall objective is to produce maximum value with minimum total cost and establish a competitive advantage.

Cost leadership emphasizes producing standardized products at a very low per unit cost for consumers who are price sensitive. Differentiation is a strategy aimed at producing products and services considered unique industry wide and directed at customers who are relatively price insensitive. Focus means producing products and services that fulfill the needs of small groups of customers (niche market).

One will see differences in value chains of firms within the same industry sometimes, as the variance from company to company depends on differences in strategic approach and whether or not the firms have the same breed of vertical supply linkages. Analysis, being constrained by the aspects mentioned above, means the strategic options of a company are limited. Additionally, the value chain can only provide valid analyses to firms which operate within a single industry, defined by common technology (Haslam et al, 2000) (see Figure 1, p. 1). Further, if the company at hand is pertinent to this form of analysis, only the processes from acquiring any raw material to finished manufacture are involved.