Value Chain Analysis
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This document discusses Porter's value chain model and provides examples of value chains for Walmart and Tata Motors. It explains that Porter's generic value chain model identifies primary and support activities that create value for customers. The document then analyzes Walmart's value chain activities like logistics, operations, and human resource management. It also maps out Tata Motor's value chain and value system, highlighting key partners and activities in areas like procurement, operations, marketing and service.
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Value Chain Analysis
- 1. Value Chain Analysis ACT ‘C’ Group III YeshiWangchuk (404) Sonam Rabgay (100) Damchoe (217) DamchoeWangchuk (060) Melam Rinzin (277) Choki Gyeltshen (412) Born in 1947 Harvard professor Wrote book, Competitive Advantage
- 2. Firm Infrastructure Human Resource Management Technology Development operations Marketing & Sales Outbound Logistics Inbound Logistics Procurement Services Primary Activities Support Activities Figure 1: Porter’s Generic Chain
- 3. Primary Activities Inbound Logistics The receiving and warehousing of raw materials Distribution of raw materials to manufacturing and operations
- 4. Primary Activities Operations Process of transforming inputs into finished goods and services
- 5. Primary Activities Outbound Logistics Warehousing of finished goods Distribution of those finished goods to customers or retail stores
- 6. Primary Activities Marketing & Sales Identification of customer needs Deploying product into marketplace Process of selling to customers
- 7. Primary Activities Service Supporting customers after they buy products and services
- 8. Support Activities Procurement The purchasing of raw materials and inputs needed to create the product
- 9. Support Activities Technology Development Technology developments that support value chain activities
- 10. Support Activities Human Resource Management Activities associated with recruiting, training, hiring, and compensation
- 11. Support Activities 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
- 12. 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 Cost Advantage Reducing cost of individual value chain activities Reconfiguring the value chain
- 13. SERVICE BASED WALLMART’S VALUE CHAIN Business Infrastructure Human Resource management Technology Development Primary Activities 400 Plus Truck-Tractors, 30000 square foot stores for small town Top management spending bulk of time within stores, employees called as associates, incentives and profit sharing, stock purchase, Decentralization Uniform Product Code (UPC) at point of sale, Cross docking, Satellite Marketing & Sales Network Outbound Logistics Operations Inbound Logistics Services Very low cost as 2% (half of industry average) 9 to 9 working hours , 7 days of week Strong presence of distributio n centers Every day low price. Always low price, cash and curry Quick response, No question asked policy on returns. Supportive Activities Procurement Good bargaining power with vendors, No vendor accounting for more than 2.8% of total purchase.
- 14. Value Chain & Value System of TATA motors Inbound Logistics Transporters, Convoy Drivers Association SAP , VCM Operations Marketing & sales Service Outbound Logistics Suppliers , Contractors SAP , CRM - DMS Strategic Alliances Dealer Network, Marketing Research Firms, Vehicle Financing Regional Warehouses, Dealer Workshops, Distributors, TASS
Editor's Notes
- Michael Porter is a current Professor at Harvard University and he wrote the well known Competitive Advantage which defines the strategic advantage one business has over its business rivals.
- Inbound logistics include the processes like receiving, storing, inventory control, transportation planning. The relationship between suppliers are very important here because they play a major role in the distribution of raw materials.
- In Operations the processes that occur are machining, packaging, assembly, equipment maintenance, and testing. Here is where the transformation starts and products come to life and are then sold to customers.
- In outbound logistics some of the Processes include: warehousing, order fulfillment, transportation, and distribution management. The products are then sent to Apple for sale
- In Marketing and sales the Processes include:advertising, promotion, selling, and retail management
- Examples: customer support, repair services, training, and installation
- Examples: R&D, process automation, design, redesign SAP is an enterprise resource program that supports various business functions in the value chain. It has financial support features to support accounting in the firm’s infrastructure, human capital management support to help HR management, and operations support to aid in the firm’s operations and procurement. Walmart’s Retail Link system helps keep inventories costs low and procurement costs down