Value Chain Analysis of Aggreko

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)

One of Porter’s main contributions was Porter’s value chain. The value chain is all the activities an organization undertakes to create value for a customer. According to Porter, there are two ways to gain an edge over competitors. A firm must provide comparable but value but perform the activities on the chain at a lower cost, or; Perform services in a unique way

“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.

To achieve a low-cost edge over rivals, a firm’s cumulative costs across its overall value chain must be lower than competitors’ cumulative costs. There are two major avenues for accomplishing this: 1. Performing essential value chain activities more cost-effectively than rivals 2. Revamping the firm’s overall value chain to eliminate or bypass some cost-producing activities.

yielding two equal peaks, as observed in some more complex models (Fig. 2A, scenario 2). If two unequal peaks recruit GTPase equally, then the two unequal peaks would simply coexist (Fig. 2A, scenario 3).

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Porter (1985) argues that competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product. A firm can achieve competitive advantage if it posses ‘capabilities’ that allow it to create not only positive value but as well additional total value than its competitors. Porter maintains that a company’s competitive advantage derives as much from the nature of the linkages among activities as it does from the activities themselves. Using Porters value chain Appendix 4 as a tool to examine how Greggs’ strategy is operationalised creating value through linkages in the value

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

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.

From a Value based Management point of view, the value chain framework helps to build a relative competitive advantage, together with Porter’s competitive advantage thinking. The value chain framework can be seen as one of two dimensions in maximizing corporate value creation.

Many organizations do not achieve the profits they anticipate by using incorrect methods or models to determine the true costs of products and services. This failure to correctly assess the costs associated with business not only affects the profit margin, but the organizations competitive advantage as well. In order to asses whether the organization is failing to realize optimum resource allocation, the organization should look at the methodology first popularized by Michael Porter titled the Value Chain Analysis (VCA). "VCA seeks to define the entire chain through which goods are supplied to a customer" (Booth, 1997, 2). The VCA can be a powerful tool in increasing an organization's competitive advantage; by

Thomas M. Idzorek, CFA Director of Research Ibbotson Associates 225 North Michigan Avenue Suite 700 Chicago, Illinois 60601-7676 312-616-1620 (Main) 312-616-0404 (Fax) tidzorek@ibbotson.com

The concept of the supply chain underscores the importance of operations as a benchmark to strategy. Supply chain is built on the framework of the “value chain” of Michael Porter. Porter (1985) defined the value chain as a set of activities that an organization carries out to create value for its customers. He divided the value chain into two:- primary activities and support activities; all pushing towards having a competitive advantage over other organizations. The value that’s created and captured by a company is the profit margin: