The Importance Of Value Chain Analysis

1257 Words6 Pages
for innovation and better team contributions, and strategically managing resources as per the intent. For example, DhirubhaiAmbani had a strategic intent of being a global leader in his field by producing polyester producer at lowest cost possible, which was achieved by rigorous operational efficiency, working on cost effective scales and other cost integration techniques. Another example can be Tata Nano, where its management team had a strategic intend to develop world’s cheapest ‘a people car’ within a small time frame. 4.9 Stretch and Leverage 4.9.1 Stretch Stretch is the firm’s capability to streamline its resources to its optimum level in the most difficult situations in order to meet demands created by external environment. It pushes…show more content…
Analyzing the value chain: This requires examining each activity involved in producing the goods or services within the chain. Then categorizing which of them can be termed as strengths or weaknesses on the basis of whether they are adding value to the firm and if they are providing competitive advantage to the firm. 2. Examining the linkages within the chain: Linkages are the connections between the ways activities are performed within the chain. In order to gain the competitive advantage in the firm, a firm can perform different set of activities in different ways to achieve different results. For example, in the manufacture lifecycle, product examination and testing can be performed by the workers themselves and a separate team for quality control may not be required because of this production cost will increase. However this increased cost will be offset by the reducing the number of people in repair teams and increasing the time given to sales team to market and sell the product instead of exchanging already sold goods which are…show more content…
Synergies among different value chains: Firms tries to do the activities mentioned in the value chain at the lowest cost possible. If a particular activity is not achieving highest possible economy of scale, then the firm tries to perform multiple activities from different value chains together to achieve the economy of scale. Let’s say, if a firm is not achieving the economies of scale in distribution of product, then it will try to add another product of different value chain in the same distribution channel to achieve the economies of scale. Cost of sharing the distribution channel will be lesser than the cost incurred if the distribution of two products happen separately and they are not achieving the economies of scale. 4.12 Firm’s best strategic fit Firm’s best strategic fit refers to the extent to which an organization can match its resources and capabilities with the external environment of the market and opportunities present. And this happens only via a planned processes and strategies for which it is required to have a proper buffer of resources and capabilities to implement their strategic processes. If a firm realizes that it
Open Document