Corporate value chain


Corporate value chain
With ever-increasing competition for unbeatable prices, exceptional products and customer loyalty, businesses must continually evaluate the value they create. One of the most valuable tools, the value chain analysis, provides businesses an advantage over their competition (Analysis, 2019).
Chartered Global Management Accountant (CGMA) discusses the benefits of a value chain analysis: "Value chain analysis can help organizations to gain better understanding of key capabilities and identify areas for improvement. It can help them to understand how competitors create value; and help organizations to decide whether to extend or outsource particular activities."
A business begins by identifying each part of its production process, noting steps that can be eliminated and other possible improvements. In doing so, businesses can determine where the best value lies with customers, and expand or improve said value, resulting in either cost savings or enhanced production. At the end of the process, customers can enjoy high-quality products at lower costs (Analysis, 2019).
                                                 
                                                    



                                                             
What is a value chain?

A value chain is the full range of activities including design, production, marketing and distribution – businesses conduct to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials used to make their products, and consists of everything added before the product is sold to consumers.

Value chain management is the process of organizing these activities in order to properly analyze them. The goal is to establish communication between the leaders of each stage to ensure the product is placed in the customers' hands as seamlessly as possible. Porter's value chain
Harvard Business School's Michael E. Porter was the first to introduce the concept of a value chain. Porter, who also developed the Five Forces Model to show businesses where they rank in competition in the current marketplace, discussed the value chain concept in his book "Competitive Advantage: Creating and Sustaining Superior Performance" (Free Press, 1998).

"Competitive advantage cannot be understood by looking at a firm as a whole," Porter wrote. "It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product. Each of these activities can contribute to a firm's relative cost position and create a basis for differentiation."


References

Lucidchart.com. (2019). 4 Fundamental Change Management Models | Lucidchart Blog. [online] Available at: https://www.lucidchart.com/blog/four-fundamental-change-management-models [Accessed 3 Jan. 2019].




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