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Porter's Value Chain


❶And when you provide more value to your customers, you build competitive advantage.

What is a Value Chain Analysis?

Porter’s Value Chain Analysis
How to Improve the Value Chain

The relationship with the suppliers is essential to the creation of value in this matter. These are all the activities for example production floor or production line that convert inputs of products or services into semi-finished or finished products.

Operational systems are the guiding principle for the creation of value. These are all activities that are related to delivering the products and services to the customer. These include, for instance, storage, distribution systems and transport.

These are all processes related to putting the products and services in the markets including managing and generating customer relationships. The guiding principles are setting oneself apart from the competition and creating advantages for the customer. This includes all activities that maintain the value of the products or service to customers as soon as a relationship has developed based on the procurement of services and products.

In the figure dotted lines represent linkages between a support activity and a primary activity. A support activity such as human resource management for example is of importance within the primary activity operation but also supports other activities such as service and outbound logistics. This concerns the support activities within the organization that enable the organization to maintain its daily operations. Line management, administrative handling, financial management are examples of activities that create value for the organization.

This includes the support activities in which the development of the workforce within an organization is the key element. Examples of activities are recruiting staff, training and coaching of staff and compensating and retaining staff.

These activities relate to the development of the products and services of the organization, both internally and externally. Examples are IT, technological innovations and improvements and the development of new products based on new technologies. These activities create value using innovation and optimization. These are all the support activities related to procurement to service the customer from the organization.

Examples of activities are entering into and managing relationships with suppliers, negotiating to arrive at the best prices, making product purchase agreements with suppliers and outsourcing agreements. Organizations use primary and support activities as building blocks to create valuable products, services and distinctiveness.

There are four basic steps that have to be followed if you wish to use the Value Chain as an analysis model. By following these basic steps the organization can be analyzed using the Value Chain. For each primary activity, sub-activities can be determined that create a specific value for an organization.

Here it concerns the idea how value support activities such as firm infrastructure, human resource management, technology development and procurement can create value within the primary activities. Use the same distinction as in step 1 for direct and indirect activities and quality assurance. This will also have to be done for the other support activities.

This is a crucial and time-consuming step because this is about finding the links between the added value you have identified. This part is of importance for an organization when it concerns increasing competitive advantage from the value chain.

For example, a development within a CRM solution can have a link with increasing production and sales volumes through certain investments.

Another example is the link between the complaints that have been recorded within the primary activity and the increase of unfilled vacancies human resource management within the primary activity outbound logistics.

This is about quantitative and qualitative investments that can eventually contribute to increasing your customer base, competitive advantage and profitability. This tactic is designed to make the most of existing customers rather than concentrate on marketing to win new customers. Examples of such steps include building up good relations with customers, for example through after-sales care and support, and offering discounts for repeat customers. Such activity can even result in existing customers recommending the product and manufacturer to friends and colleagues.

The customer value chain has changed a lot since the days of brick and mortar and catalog sales. Today, the customers is much more savvy, they often do their own research on products they are interested in. Companies have to be attuned to how and where the customer buys, whether it be in person, online, or by phone.

Companies are much better at keeping good inventory and watching supply and demand. That way, they can usually fill orders immediately. Companies can look at other sites so they can offer best offers and discounts. The customer review forum gives the company lots of information to improve products and service. Misscoco Post 4 turkay - I'm afraid that what you say is basically true. Customers don't enjoy doing surveys, especially if they are lengthy.

I don't know what it is - either they can't think of a quick answer or they won't take the time. What can be done to get feedback and improve your customer service value chain? You could try calling your customers and have a very short friendly conversation with them, embedding some questions into the conversation. Then maybe follow up with a mailed card offering a "thanks for shopping with us" and perhaps a discount coupon. I think that I would like that kind of approach.

I finally read a very simple explanation of it. It said that the customer value chain is about the value of a product or service for the person who is receiving it. Supply chain, on the other hand, is the value of a service or product for the person giving it. Isn't this a great basic explanation? I've also learned from this that the value for each customer will be different because each customer has different expectations and notions about that product.

This must make value chain management difficult because you are basically comparing different value systems to one another and trying to reach a conclusion about it. If you had an online store, you could design a feedback window immediately after purchases to get feedback about their experience. But since you don't have that, you can still set up a website where customers can submit feedback, questions and suggestions to you. You can also email them for feedback via your website.

The other option would be to keep in touch with customers through online social media sites. I think you are on the right path, the customer value chain will give you a lot of good insight. I have an online store as well and I've noticed that we often miss our customers' point of view about our services and products We need to go out of our way to learn about it.

How can we go about doing this more effectively? I have a small shop and I would like to explore our customer value chain further to determine if we are doing anything wrong and what more we can do to satisfy and impress our customers.

We have a local physical shop no online shop so our sales really depends on loyal customers. We have tried getting feedback from them through phone before, but we weren't able to get much feedback.

What else can I do to learn about our customer value chain better? Post your comments Post Anonymously Please enter the code: One of our editors will review your suggestion and make changes if warranted.


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Customer Value Chain Analysis (CVCA) is an original methodological tool that enables design teams in the product definition phase to comprehensively identify pertinent stakeholders, their relationships with each other, and their role in the product’s life cycle.

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Ideally, value chain analysis will help identify areas that can be optimized for maximum efficiency and profitability. It is important, along with the mechanics of it all, to keep customers feeling confident and secure enough to remain loyal to the business.

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Value Chain Analysis is a three-step process: Activity Analysis: First, you identify the activities you undertake to deliver your product or service. Value Analysis: Second, for each activity, you think through what you would do to add the greatest value for your customer. Value chain analysis (VCA) 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 differentiation.

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Value chain analysis is an extremely useful management tool which identifies the activities that go into creating a superior product or service that is highly valued by customers. The outcome of creating this highly valued product is that customers are willing to pay a premium, which exceeds its costs, thereby delivering higher profit. Value chain analysis is the method for determining the critical path to enhance customer value while reducing costs. Since the mids, Michael Porter’s value chain analysis (i.e., his original five forces value chain model) has been a useful tool for numerous companies to develop and sustain breakthrough competitive advantages.