Value Chain and Competitive Advantage Strategic Management: Concepts & Cases 14 th Edition Fred David and other sources COPYRIGHT 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL Ch 3-1
VALUE CHAIN ANALYSIS* The process whereby a firm determines the costs associated with: Purchasing raw materials Manufacturing products Marketing products And compares them to the value chain of rival firms COPYRIGHT 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL Ch 4-2
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VALUE CHAIN ANALYSIS Core competencies Distinctive competencies Benchmarking COPYRIGHT 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL Ch 4-5
Value Chain Elements* Primary Activities Definition Examples Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Activities used to receive, store, and disseminate inputs to a production process. Activities needed to convert inputs into finished goods. Activities to move finished goods to final consumers. Meeting unmet consumer needs. Communicating with consumers concerning new goods/services or improved goods/services. Activities which enhance or maintain product value. Material handling Warehousing Inventory control Flexible manufacturing Robotics Automation Transportation infrastructure Distributor network New products Re-designed products Marketing communications network Warranty Reliable customer service 6
Value Chain Elements* Secondary Activities Definition Examples Procurement Activities which address purchasing the inputs to produce a firm s products. Raw material sourcing Investment in plant and equipment to improve production/manufacturing. Technological development Human resource management Firm infrastructure Processes by which new or improved products are developed. Improvements in manufacturing processes. Investments in human capital. Support activities to improve primary or other secondary activities Product R&D Process R&D Hiring, training, developing, and compensating employees. Strategic planning Government relations Financial analysis. 7
TRANSFORMING VALUE CHAIN ACTIVITIES INTO SUSTAINED COMPETITIVE ADVANTAGE Value Chain Activities Are Identified and Assessed Core Competencies Arise in Some Activities Some Core Competencies Evolve into Distinctive Competencies Some Distinctive Competencie s Yield Sustained Competitive Advantages COPYRIGHT 2011 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL Ch 4-8
From Resources to Competencies, Core Competency, Capabilities, Dynamic Capability Competencies* Combination of knowledge, experience, productive attitudes / attributes and the right combination of functional and technical skills to make things happen Core Competency * Primary Competencies that a firm leverages to compete. (Hamel and Prahalad 1989) Dynamic Capability* refers to the firm s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environment. It reflect an organization s ability to achieve new and innovative forms of competitive advantage given path dependencies and market position (Teece 2007) Capabilities * Refers to the ability of an organization to perform a coordinated set of tasks, utilizing organizational resources, for the purpose of achieving a particular result. (Helfat and Peteraf 2003) 9
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