Value chain analysis essay

Some examples of operational activities are machining, packing, assembling and testing. Equipment repair and maintenance also falls into this category. It includes both- manufacturing and service operations. Analysis of operational activities is important for improving productivity, maximising the efficiency and ensuring the competitive success of KFC. The increased productivity can help KFC to achieve consistent economic growth, increase profitability and set a powerful basis for competitive advantage.

Outbound logistics include the activities that deliver the product to the customer by passing through different intermediaries. Some outbound logistics activities are material handling, warehousing, scheduling, order processing, transporting and delivering to the destination. KFC can analyse and optimise the outbound logistics to explore competitive advantage sources and achieve its business growth objectives.

Because, when outbound activities are timely managed with optimal costs and product delivery processes put a minimum negative effect on the quality, it maximises the customer satisfaction and increases growth opportunities for the firm. KFC should pay specific importance to its outbound value chain activities when its offered products are perishable and require quick delivery to the end customer. At this stage, KFC will highlight the benefits and differentiation points of offered products to persuade the customers that its offering is better than competitors.

Only producing a high quality product at affordable costs and distinctive features cannot create value until KFC invests on the marketing and sales activities. The sales agents and marketers play an important role here. Some examples of KFC's marketing and sales activities are- sales force, advertising, promotional activities, pricing, channel selection, quoting and building relations with channel members. The company can use the marketing funnel approach to structure its marketing and sales activities.

Effective and wisely integrated marketing activities can develop the brand equity of KFC and help it stand out from the competition. However, KFC must avoid making false commitments about product features that cannot be fulfilled by the production department. It indicates the need to ensure coordination between different value chain activities. The pre-sale and post-sale services offered by the KFC will play an important role in developing customer loyalty.

The modern customers consider post-sale services as important as marketing and promotional activities. The power of negative e-WOM due to poor support service cannot be undermined in the current technologically advanced era. The company must analyse its support activities to avoid damaging brand reputation, and instead use it as a tool to spread positive word of mouth due to quick, timely and efficient support services. The support activities play an important role in coordinating and facilitating the primary value chain activities.

KFC can also benefit from analysis of its support activities as explained below. The firm infrastructure denotes a range of activities, such as- quality management, legal matters handling, accounting, financing, planning and strategic management. Effective infrastructure management can allow KFC to optimise the value of the whole value chain. KFC can control the infrastructure activities or commonly called overhead costs to strengthen the competitive positioning in the market. KFC can analyse human resource management by evaluating different HR aspects, including- recruiting, selecting, training, rewarding, performance management and other personnel management activities.

The effective HR management can allow KFC to reduce competitive pressure based on motivation, commitment and skills of its workforce. The company can also achieve its cost minimisation objectives by analysing hiring and training costs with their relative return. The heavy dependence of KFC on employees' talent will increase the importance of this value chain support activity.

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In a modern, technological advanced era, almost all value chain activities depend on technological support. The technological integration in production, distribution, marketing and human resource activities requires KFC to realise the importance of technology development.

It can be divided into product and process technological development activities. Some examples are- automation software, technology-supported customer service, product design research and data analytics. The research and development department of KFC is classified in this category. The procurement in value chain denotes the processes involved in purchasing the inputs that may range from equipment, machinery, raw material, supplies, raw material and other items necessary for producing the finished product.

Due to its linkage with multiple value chain activities, KFC should carefully consider its procurement activities to optimise the inbound, operational and outbound value chain. As mentioned above, the application of Porter Value Chain model depends on understanding the importance of all activities. After understanding the relative importance of identified value chain activities, KFC should highlight areas where value can be added, cost efficiency can be achieved, differentiation basis can be set, or processes can be optimised.

It is important for KFC to base its competitive advantage on activities in which it has access to the rare or scare resources. It may include- intellectual capital, assets, skills or distribution network. The Value Chain Analysis can help KFC identify those activities and develop those areas to get a strong competitive edge over rivals. There are many examples like Toshiba and Sharp that consider Value Chain Analysis as a tool to get a competitive advantage and invest heavily in research and development activities within their value chain network.

The analysis of the value chain activities can be done to understand the competitive advantage sources. KFC can either use the operations, marketing and other relevant value chain activities to avail the cost advantages or it can use the human resource, technology, infrastructure, service or other relevant activities to set the strong differentiation basis.


Broadly, the competitive advantage sources can be grouped into two types- cost and differentiation. KFC can obtain a competitive advantage from one or both sources, depending on the depth and breadth of its Value Chain Analysis. KFC can avail the cost advantages by reducing the costs associated with the value chain activities. However, it requires the company to firstly map the activities and then associate costs to make necessary adjustments.

The connection between the value chain and cost leadership strategy reflects a parallel focus on the low cost operational activities. If KFC aims to obtain cost advantage, it needs to identify each element within the value chain can be optimised to get the whole effect. If product differentiation is the aim of KFC, Value Chain Analysis will help the company in maximising the efficiency and enhancing the product quality by improving processes.

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KFC can control following drivers to add value, set differentiation basis and enhance efficiency. However, it is important to note that costs can be reduced only to some extent. KFC can obtain the differentiation advantage by analysing different value chain activities. For instance, a company can procure the unique and valuable inputs that are not easily available to competitors.

KFC can either reconfigure the whole value chain or change individual entities to set the differentiation basis. The cost drivers such as timing, interrelationships, linkages, scaling and integration can also be altered to develop uniqueness.

Value Chain Analysis Essay Example

KFC can individually analyse the primary activities from all aspects and create differentiation basis by identifying the following sources:. KFC can also analyse the secondary value chain activities to set differentiation basis:. However, it is also important to note that the Porter Value Chain model application depends on the unique contextual variables that must be considered when assigning the weightage to primary and secondary value chain activities. Baldwin, R. Value creation and trade in 21st century manufacturing. Journal of Regional Science, 55 1 , Bustinza, O. Servitization and competitive advantage: the importance of organisational structure and value chain position.

Research-Technology Management, 58 5 , Chang, W. Amazon offers a wide range of products from books to apparel and jewelry to consumer electronics. Amazon has come a long way from just being known as an online bookseller.

It has launched a marketplace in India, opened a website to sell high-end art. Also with its Kindle and other tablet products to rival other competitors and also providing web services. From this we can see that Amazon is trying to break into all markets Stone, Amazon has spent millions of dollars in its marketing approach to its customers. Amazon uses a personalized e-mail system to market its deals to its customers based of their past browsing history.

Amazon has a great deal of market opportunity. This section will review Amazon market opportunity analysis. A few of these opportunities are; developing an online payment system, the payment system will be a great benefit to the Amazon customer that use their smart phones and are not in a position to input their bank information.

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Opening more online stores in other countries. Amazon is a growing household name and with the increase in the accessibility of the internet in growing economy this will give Amazon the ability to expand into new territory and markets which in return increase its market share and profitability. Value can be measured as the sum of the values that can be appropriated over all participants in the business model and over all transactions enabled by the business model. Efficiency goes up when the costs per transaction goes down.

Amazon as increased its efficiency by investing money into its system to make the site user friendly with a wide range of selections. Providing a greater selection of items at a reduce cost, and its partnership with UPS it has been able to decrease its order fulfillment time. These are list of times that are related to the items being purchased this increase value because it decrease the time the customer are looking for other times, thus saving the customer time by bundling the items together.

The lock-in value driver refers to customer retention. Amazon as locked in a core group of users by offering great deal with loyalty programs and creating a safe trusted interface where customers can complete transactions and not worry about their information being stolen. The last of Amit and Zott value drivers is novelty. Value proposition should emphasize both the benefits the customer will receive and the price the customer will be charged as compared to the competition. The value proposition as related to demand chain comes in different forms.

Amazon has a large selection of product which meets the needs and wants of its customers. The company offers its users the best customer service. When a customer experiences dissatisfaction it goes to the top of the chain. CEO Jeff Bezos gets involves and demand an explanation for how this occurred.

In a Bloomberg BusinessWeek article it explains that Amazon is built to adapt. Finding new ways to serve its existing customers and expand to new customers in ways. With the technology in place and the drive of the company to meet the needs of its customers at all level shows a strong value proposition on the demand side. Their partnership with key suppliers allows Amazon to maintain very little physical inventory. With technological advancement Amazon as designed unique systems that entirely automates it product ordering system that is linked with its supply. A supply chain is defined to be the processes whereas raw materials are converted into final products.

The supply chain just like the demand chain is critical to the success of the value chain. It is the successful combination of both supply and demand chain that adds value to a company. The supply chain is comprised of two integrated processes; the productions planning and inventory control process, and distribution and logistics process Beamon, Production is an important part of the supply chain.

Its business model has provided it with the ability to negotiate lower prices with its suppliers to over its users the best deals.

Analysis Of The Supply Chain Strategy Of Apple Inc

Amazon ordering system it top of the line; with the ability to automatically order products once inventory is low to keep up the demand. Amazon ships millions of products every year. Being an online story with no physical location having an effective delivery system is key to success.

Amazon offers different shipment options, from same day, next day, to standard. Amazon is able to deliver orders its customers in two forms, from its warehouse and distribution centers and also directly from suppliers through partnership with distributors, publishers, manufactures, and other partners. Amazon puts great pride in its customer service.

In a Forbes article the author states that Amazon has been the driving force behind the growth in e-commerce and the evolution of customer service excellence in the modern day. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. Enterprise value is basically what a company is worth to another company, in a buyout situation. Industry drivers are all factors that affect how a business operates, such as economy, environment, political, and the market itself. In the online retailing industry companies try to use price as there biggest industry driver.

Competitive advantage is the advantage a firm has over its competitors. Competitive advantage can be in two forms cost advantage and product advantage. Amazon has been able to keep its advantages by tapping into both forms of advantages. Amazon offers its customers the lowest price on products with its strong and effective supply chain. The system it has developed allows the customer to directly order from the supplier anywhere in the world at the lowest price possible.

Amazon not only has a cost advantage it also has a product advantage. Being an online retailer that started out with selling only books has now expanded into many other departments. Compare to one of its biggest competitors Barnes and Nobles, it is able to offer more selections in books due to its unlimited storage space. Also with its kindle tablet it saves customers a trip to the store and allows them to download instantly.

The business dictionary defines customer delight as the very favorable experience of the client of a business when they have received a good or service that significantly surpasses what they had initially anticipated business dictionary,. Amazon already has great customer service proven by all the awards it has earned. The way Amazon handles problems that arise are a big part to its customer retention rate. Instead of having to talk to a computer, you can leave your number and a live human being will call you back to resolve you issues with the upmost respect Hampton, A chain is as strong as its weakest link, and Amazon has effectively strengthened all aspect of its value chain.

For these reasons the company has been seeing constant growth both in the number of users and number of new service because it believes in improving on everything. Value Chain Analysis.