Starbuck Value Chain Essay

A value chain is a tool for recognizing the business activities that adds value and competitive advantage to an organization [8][21]. When a company wants to develop its competitiveness and attain its goals, it must first carry out a series of test in turning value to finished goods, afterwards transform its finished goods to the final product [1][26]. This series of steps is known as value chain [26]. The value chain is an essential tool for strategic management; it allows a firm to position a product or service in the market [1]. In general value chain targets three objectives [1]

• Value creation

• Cost decrease

• Improving the customer service

Introduction

Starbuck’s history dates back to 1971, when three academicians Jerry Baldwin, Zev

The value chain can be reconfigured by relocating, reordering, regrouping or eliminating activities that are part of the major improvement in competitive position [21]. The value chain system can provide input on how to effectively and efficiently distribute resources throughout the chain [1][21]. A value chain can be defined as a framework for describing the activities that are required to convey a product or service from beginning throughout the different stages of production, delivery to the final customer, and last disposal after use [16]. As shown below the figure represents the inter-chain linked within a value chain Figure 1: Links in a value chain [16]

How is a value chain defined?

The concept of the value chain was introduced in 1985, its aim is to identify how the business processes can be improved and grow the competitive advantage. There are basically two types of competitive advantages that companies are striven for, cost and differentiation [4].

To gain a cost advantage, organizations must

• Decide the primary activity of the company, including the support activities carried out [4].

• Examine each activity from the production stage to after sales support