In: Economics
Demonstrate how a company can add value by using Porter’s value chain analysis and use it for measuring customer satisfaction (500 words)
The value chain also known as Porter's Value Chain Analysis is an organizational management principle that Michael Porter developed. Michael Porter discusses Value Chain Analysis; that a value chain is a set of actions that a organization performs in order to generate value for its clients. Creation of value creates added value which results in a competitive advantage. Ultimately, added value also creates an organization with greater profitability.
The Porter's Value Chain Analysis strength lies in its approach. The Porter's Value Chain Analysis focuses on customer-focused systems and activities rather than departments and categories of accounting expenses. The program links processes and operations to one another and shows what impact this has on costs and benefit. Consequently, it (Value Chain Analysis) makes it clear where the organisation's sources of revenue and loss quantities can be found.
A value chain is a model of looking at all of your business processes and finding out how to achieve a competitive edge by concentrating on increasing the full value of your product or service while at the same time holding your profit margins in the green.
Cost leadership involves targeting cost-conscious customers, and as such the value chain approach will involve seeking ways to essentially reduce differentiation by using standardized parts during production, simplifying and economic processes involving less expertise, solving simple and common problems and not seeking to offer any genuinely unique value.
The core idea is to use some sort of differentiation to set your
product or service apart from the competition, and to preserve the
perceived value of the product alongside this differentiation, it
succeeds in gaining market share by offering a unique,
hard-to-imitate value proposition. The point of departure is to
focus on a given niche market. That is that part of the "goal." But
Porter argued that you need something more to make sure you 're not
running the risk of competing against big business that can afford
to outdo you in your niche.
Supply chain: Beginning with the supplier of materials, and ending
with the product or service delivered to the client. It covers all
operations including raw material procurement, production
logistics, distribution , marketing, and final deliveries.
Infrastructure is the underpinnings of the whole value chain, not just individual activities. In coordinating business decisions and effectively managing resources, strategic infrastructure is one of the most valuable avenues to gain a competitive advantage.