Question

Discuss and illustrate the generic value chain for a company and briefly describe the contributions of each of its elements.

Answer 1

A value chain is a combination of processes in an organization from start to finish. It is made of subsystems that used to create products and services, in other words, to make money.

The value chain consists of five primary activities and further includes four secondary activities. The primary activities include the following:

• Inbound Logistics - The relationship with suppliers by managing inbound inventory, storage in warehouses, and controlling those inventory is included in Inbound Logistics.
• Operations - This includes processing the raw materials or inventory into finished products or services. This includes all kinds of inputs, including human resources, raw materials, time, etc.
• Outbound Logistics - The activities involved in distributing the finished products or services to the customers are involved in this activity. This includes the delivery of the product or service, storage, and distribution system. All these activities can be internal or external.
• Marketing & Sales - Strategies to enhance visibility and target appropriate customers—such as advertising, promotion, and pricing—are included in marketing and sales. All the activities that help convince a consumer to purchase a company’s product or service.
• Services - This includes the activities of after-sale service that enhances customer experience. Customer service, maintenance, repair, refund, and exchange are a few services that an organization can offer.

Value Chain Secondary Activities:

• Procurement - It is the acquisition of raw materials and inputs for the organization by which output is created. it includes finding and negotiating prices with suppliers and vendors. It is a secondary activity as it depends heavily on Inbound Logistics.
• Human Resource Management - Hiring and retaining employees who will fulfill business strategy, as well as help design, market, and sell the product. Managing employees is useful for all primary activities, where employees and effective hiring are needed for marketing, logistics, and operations, etc.
• Infrastructure - A solid infrastructure is the base of all primary activities. This includes administrative, legal, and accounting activities.
• Technological Development - Technological development is used during research and development and can include designing and developing manufacturing techniques and automating processes. This includes equipment, hardware, software, procedures, and technical knowledge.