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Porter's Value Chain Presentation 1

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Porter's Value Chain Presentation 1

  1. 1. Porter’s Value Chain  Born in 1947  Harvard professor  Wrote book, Competitive Advantage
  2. 2. Primary Activities Inbound Logistics Operations Outbound Logistics Marketing and Sales Service
  3. 3. Inbound Logistics The receiving and warehousing of raw materials Distribution of raw materials to manufacturing and operations
  4. 4. Operations Process of transforming inputs into finished goods and services
  5. 5. Outbound Logistics Warehousing of finished goods Distribution of those finished goods to customers or retail stores
  6. 6. Marketing & Sales Identification of customer needs Deploying product into marketplace Process of selling to customers
  7. 7. Service Supporting customers after they buy products and services
  8. 8. Support Activities Procurement Technology Development Human Resource Management Firm Infrastructure
  9. 9. Procurement The purchasing of raw materials and inputs needed to create the product
  10. 10. Technology Development Technology developments that support value chain activities
  11. 11. Human Resource Management Activities associated with recruiting, training, hiring, and compensation
  12. 12. Firm Infrastructure Includes general and planning management, legal, finance, accounting, public affairs, and quality management Ex. A firm’s legal team consisting of lawyers to aid in lawsuits Accounting department to keep track of financial figures
  13. 13. Why this matters Profits depends on how well firms execute these activities in the value chain Firms that excel in a value chain activity is said to have a competitive advantage Competitive advantage is gained through cost advantage
  14. 14. Cost Advantage Reducing cost of individual value chain activities Reconfiguring the value chain
  15. 15. 10 Costs Drivers of Each ValueChain Activity1. Economies of Scale2. Learning3. Capacity Utilization4. Linkages among activities5. Interrelationships among business units6. Degree of vertical integration7. Timing of market entry8. Firm’s policy of cost or differentiation9. Geographic location10. Institutional Factors (regulation, union activity, taxes etc.)
  16. 16. Reconfiguring Value Chain Structural changes to an activity in a value chain to reduce costs
  17. 17. The Bigger Picture Firm’s value chain is part of a bigger value chain Competitive advantage also depends on the management of connections with other firms’ value chains
  18. 18. Citations http://www.12manage.com/methods_porter_value_ch ain.html http://www.netmba.com/strategy/value-chain/ http://en.wikipedia.org/wiki/General_Motors_Chapte r_11_reorganization

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