A value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage). To the firm and which ones could be improve to provide competitive advantage.
Approach to the PIMS (Profit Impact of Marketing Strategy).
The approach introduce is trying to figure out the strategic factors. That influence on the magnitude of the ROI (return on Investment) using regression models. This model is further develop by the marketing Science Institute and Strategic Planning some of the things. That affect the strengths and weaknesses of the company, namely:
- The intensity of the investment.
- Market share.
- The growth of the market.
- Recycled life products.
- The ratio of the cost of marketing and the magnitude of the sales.
If referring to research, this results in internal analysis, especially SPI emphasizes on variables related to fare above.
Approach to Value chain Analysis
Value chain approach was first introduce by Michael Porter in the mid-1980s and decades since then. It is known by many people. This approach is not much different with the functional approach. This approach also tried doing the process of dis aggregation of the company. To identify the strengths and weaknesses of the company, porter claim. That every company should be view as a set of activities perform. To design, produce, market, deliver, and support its products.
The value chain of a company as well as how the company organizes every activity are a reflection of history, strategy and design firm implement in his strategy. As well as the State of the economy which base the activity itself. Value chain describes the value of the base the activity itself. Value chain describes the total value, and consists of the activity value (value activities) and margin.
Physical Activity
The activity value is physical activity and technology organize a company to create products. That are of value to a buyer. The margin was difference between the total value of the collective cost to hold the activity value.
Activity values can be divide into two major groups, namely primary and supporting activities of the activity. Primary activities (primary activities) is an activity that is associated with the creation of a physical product. The sales and distribution to the buyer as well as after-sales service.
Incoming logistics, operations, outbound logistics, marketing and sales. As well as service is the primary activity of the five categories. While supporting activities (support activities) is an activity that gives the support that is necessary for the primary activity. It contains the supporting activity is corporate infrastructure, human resource management, technology development, and care.
Analysis of Industrial value chain (Value Chain Industry)
Industrial value chain Analysis is useful to assess whether the current company is already on the right path of the value chain in an industry than its competitors. The company is currently very difficult to run individually in getting a competitive advantage, but must join in the value chain from other companies.
Value chain analysis Corporation
Value chain Analysis should be done when the ability of the internal resources of the organization consisting of several functions of the Organization as a function of marketing, finance, production, development and functions of other There are within the company.
Each Corporation has a different value chain – different. Porter divides the company's activity which has a donation towards the establishment of the company's margin. To two clusters of activities, namely the main activity and the activity of the supporters.
A Major Activity
Inbound Logistics (logistics into), associated with the receiving, storing, and disseminating input to the product. Include in the depth of handling raw materials, warehouse and inventory control.
Operations (operation).
All activities necessary to convert input-the input provide by the logistics of getting into the shape of the final product. Including machining, packaging, Assembly, and maintenance of the equipment.
Outbound logistics (logistics to the outside), activities that involve the collection, storage, and distribution of physical product to its final customers. Includes storage of finished goods in storage, handling and processing of raw materials, orders.
Marketing and Sales (sales and marketing), activities that are resolved to provide a means through which its customers can buy products and influence them to do so. To effectively market and sell products, the company develop the advertisements and campaign professional, choose a proper distribution network, and selecting, developing, and supporting their sales force.
Service (service), activities which are design to improve or maintain the value of the product. The company is involve in a number of activities related to services, including installation, repair, training, and customization.
Supporting Activities (Support Activities)
Procurement (purchasing/procurement), activities undertaken to purchase input-input need. To produces the company's products. Input-the input purchase includes items that are all consumed during the manufacturing process of the product.
- Technology development, activities undertaken to improve the product and the process use to produce it company. Technological development can be complete in various forms, for example, process equipment design, research, and development of the Foundation, and the procedure of granting of services.
- Human resources management (human resource management), activities. That involve the recruitment, training, development, and the granting of compensation to all personnel.
- Firm infrastructure (infrastructure company) or general administration (public administration), corporate infrastructure includes activities. Such as general management, planning, finance, accounting, law, and government relations, need. To support the work of the entire value chain through this infrastructure. The company sought to effectively and consistently identify. The opportunities and threats, identify resources and capabilities, and supports core competencies.
Functional Analysis
The functional approach is a very simple approach and most first known than other approaches. According to this approach, the company profile (strengths and weaknesses) of the company. It can be seen in various business functions as functions of marketing, production/operations, finance, human resources, research/development, information systems and cultures the company.
Having regard to the function of the function is a single list of the variables. That are present in each of the functions which is a key variable for the function. Even and excellence are also hallmarks of the company as a whole.
In practice, the analysis of internal functional approach is found with the emphasis. The emphasis on the analysis of the variables and certain business functions. This cannot be forgiven because in every type of business and the necessary Key Success Factor. Some of the things that makes analysis become unbalanced are:
- Type of business/industry.
- Market segmentation and target markets.
- Life cycle stages of products and industries.
- The company's Position in the market
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