Value chain of a business is the process of transforming raw materials in to product, which creates value for its clients. the value that is created and captured by the company is the profit margin:
Value created and Captured – Cost of creating that value = Margin
The idea of value chain was initially proposed by Michael Porter (1985) to portray how customer value amasses along a chain of activities that lead to an end product or service. Porter built up a generic model to characterize how a business generates its value.
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According to Porter’s model, activities a company performs to generate margin can be comprehensively partitioned into Primary Activities and Support Activities. These can be further divided into –
Primary Activities
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Support Activities
Firm Infrastructure
Human Resource management
Technology Development
Procurement
This model can be applied to any business to comprehend its value chain. In this paper, different procedures carried out at CGI GROUP INC are described in lieu of this model.
THE COMPANY
CGI Group Inc is a Canadian global information technology organization founded in 1976. It deals with system integration, consulting, outsourcing IT base services and solutions. Its headquarters is at Montreal, Quebec, Canada. As of now CGI is situated in forty nations with around 400 workplaces and utilize 65,000 people
1. A value chain is the sequence of activities that begins with raw materials. What result does a value chain end with? Delivery of products or services
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)
Value chain is a set of activities a company performs in order to provide a valuable solution to their customer problem in their market space or industry. The value chain is made up of primary and support activities. Primary activities being research and development, production, marketing and sales and customer service. These are the primary steps that are required to get a product or service to market to solve the customer problems. Some of the secondary steps include company
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
Costco is among the leading global retailers which provide customers a wide range of merchandise, ranging from small to well-known brands. The company began operations in 1983. Over the years, Costco has been a retailer in low cost membership-only leader, in warehouse club of merchandise. Moreover, Costco does not offer frills warehouse business models as its competitors do. Costco’s major competitors are BJ’s Wholesale Club and Sam Club (Costco, 2010).
CGI is a global information technology and business process services provider with 69,000 professionals in more than 40 countries. The name "CGI" is the acronym for "Consultants to Government and Industry." CGI uses technology to help clients address their business challenges by delivering consulting, systems integration and outsourcing services (CGI, 2013a).
The basic principle in defining the value chain, according to Michael Porter (Porter, 1985), is that the activities include a variety of disaggregations from the below three perspectives. First, they have different economics, implying that these activities are functioning in different segments of the market. Second, even though the economics differentiation is not that evident, isolated activities should have a potential impact for it. Third, value-adding activities have significant input scale.
The industry value chain is the process from the suppliers of the raw material to the end customers who demand the service of transportation.
A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter (Porter, 2013)
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.
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.
A value chain is nothing but a set of activities that a firm operates to deliver a much valuable and quality product or services in the market. The term comes from Business management and was firstly coined by Mr. Michael Porter in his best seller.
Within technology and the value system, this called for an emphasis on media relations to disseminate information to the local community and its leaders. Solid communication practices, i.e. strategic communications, was of the utmost importance to gain the respect and acceptance of the population.
Value Chain Analysis describes the activities that take place in a business and related to the business core competencies. It can classify by primary activities and supporting activities.