© 2012 Pearson Education, Inc. publishing Prentice Hall. Note 7 Company Assessment— The Value Chain.

© 2012 Pearson Education, Inc. publishing Prentice Hall.

Note 7Company

Assessment—The Value Chain

© 2012 Pearson Education, Inc. publishing Prentice Hall.

Figure Note 7-1 - The Value Chain

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The Value Chain

Value chain analysis allows the strategic planner to: Identify what activities can lead to advantage Facilitate identification of what activities for a particular

firm do lead to advantage

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The Value Chain

Primary activities are concerned with the creation or delivery of a product or service Inbound logistics Operations Outbound logistics Marketing and sales Service

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The Value Chain

Support activities are needed to perform the primary activities and contribute to their effectiveness and efficiency Firm infrastructure Human resource management Technology development Procurement

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The Value Chain

The individual activities of the value chain are strategically relevant because: Each of them can constitute a cost advantage or

differentiation advantage Each of these activities a company can either win or lose

money, depending how effectively and efficiently it performs them compared to the competitors

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© 2012 Pearson Education, Inc. publishing Prentice Hall.

The Value Chain

A value chain analyses should answer the following questions: What are the activities of a company’s value chain? Which of them are strategically important in the industry? How well do we perform on the activities? Which activities generate profits and which cause losses? Which activities constitute competitive advantages or core

competences? Which activities should be outsourced?

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Figure Note 7-2 - Analysis of the Value Chain of a Pharmaceutical Company

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Figure Note 7-3 - Strategic Priority Analysis (SPA)

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