Question

How can analysis of the value chain be used to assess strategic alternatives? How does this approach differ from the market structure and the resource-based views? Provide examples to support your position.

Answer 1

Value chain analysis (VCA)

- It is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiations.

Value chain be used to assess strategic alternatives by:

• Competitive rivalry
• Bargaining power of suppliers
• Bargaining power of customers
• Threat of new entrants
• Threat of substitute products or services
• Cost leadership
• Differentiation
• Focus

Value Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Service are categorized as primary activities.

Secondary activities include Procurement, Human Resource management, Technological Development and Infrastructure chain analysis and resource-based analysis are two approaches you can use to assess your business' strengths relative to your competitors.

Value chain analysis is centered on a distribution and logistics evaluation, while resource-based analysis is more grounded in economics. Using both can help you improve business efficiency and sell your strengths to the market.