Caltex Value Chain

In order for a firm to create competitive advantage, it needs to create a set of activites that can deliver value to the specific product and services it offers to its customers. To start talking about my life as a “value chain”, I may need to compare it to a specific product”. This is going to take precedence both in my personal life and professional life.

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)

What is a value chain? Why is efficiency so important in an organizations value chain?

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“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

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.

Value chain is the ability to take a product and add some value along the way to make it appealing to the customers in such a way that they be willing to buy the product at a certain price. Many companies in today’s business world analyze their value chains to identify the ways which continue to attract their customers. The value chain analysis consist of two parts, primary activities and secondary activities. The first ones support the actual physical process of buying, manufacturing, shipping and selling the product and the secondary activities are actions that support the process, such as procurement, technical support and human resource management.

The technology is progressing at a fast pace making more and more electronic components become obsolete. New and innovative electronic components are making their way to the market, making it difficult for people to find End of Line (EOL) electronic components. And it does not help that the market is full of all kinds of suppliers, including unethical ones that sell fake products to naïve buyers.

According to Michael Porter’s concept about value chain, “activities within the business companies add value to the product and service that the business organization or companies produces”. The idea of the value chain is based on the process view of organization, the idea of seeing a manufacturing firm as a system, made up of subsystems each with inputs transformation process and output. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and

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

According to the value chain analysis, a business adds value to its products or services through a series of activities it performs within the company. First, the primary value activities describe the production, the selling, and after-sales support for its products and services. Second, the support value activities describe all business functions needed to provide the human resource, the technology, the infrastructure, and the supplies (Baltzan, 2012). EG Inc. coordinates all its value-adding activities using an MIS infrastructure, comprising of a supply chain management (SCM) system, customer relationship management (CRM) system, and enterprise resource planning (ERP) system, and as a result increases productivity, reduces cost, optimizes business operations, generates growth, and increases profitability (Baltzan,

Increase customers’ value by adding value to features of the products, improve customer service by being more responsive, increase the range of complementary products and modify as per orders. Differentiation should promote long-term profit and growth. Moreover to benefit from cost advantage, identify both primary and support activities are clearly identify, required a strong know1egde of organization value if value chain will disrupt. Analyse how to create customer value, recognize cost drivers from each activity and identify between link activities by reducing cost from one to

a. How can the company's value-chain activities be better linked to create value for the

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.