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

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Note The Value Chain 2

© 2012 Pearson Education, Inc. publishing Prentice Hall. 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 3

© 2012 Pearson Education, Inc. publishing Prentice Hall. 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 4

© 2012 Pearson Education, Inc. publishing Prentice Hall. 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 5

© 2012 Pearson Education, Inc. publishing Prentice Hall. 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 6

© 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? 7

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Note Analysis of the Value Chain of a Pharmaceutical Company 8

© 2012 Pearson Education, Inc. publishing Prentice Hall. Figure Note Strategic Priority Analysis (SPA) 9

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