The Role Of Value Chain Model

2183 words - 9 pages

2 From value chains to value networks and inter firm relationship
2.1 The evolution of the concepts of value chain
Porter´s value chain model shaped our way of understanding and analyzing industries for the past 30 years. It explores the links between the activities to be undertaken in order to commercialize a product in the market and how these activities add value to the final delivery (Peppard and Rylander, 2006). It focus on the value creation processes within the firms, not on the inter firms links in the value chain (Kothandaraman and Wilson, 2001) and how the different links influence the competitiveness of the industries (Peppard and Rylander, 2006).
Therefore, this model assumes that the value is created within one single main firm with a clear hierarchy, or expanded through the interaction of this main firm with other firms with a defining coordination. This main firm performs or coordinates the activities throughout the productive process - from raw materials to the final product. The main firm suppliers are included in the model, as they also perform tasks needed in the production process. Nevertheless, the buyer-supplier interactions are analyzed and performed taking into account market relations mainly based in price and therefore, follow a more competitive than collaborative model (Kothandaraman and Wilson, 2001).
The value creation in this model is considered linear, which means that every firm has a clear position in the value chain and provides the inputs for the next part of the production process, until reaching the customer in the market. The value is added in every new part of the process and measured in each output delivered to the next buyer in the chain.
The buyer´s choice of suppliers is based predominantly on financial aspects. Generally, the decision to buy or outsource part of the production or to do it in house is made taking into account the costs involved in the transaction and the competition in the suppliers market (Hoyt and Huq, 2000). Therefore, the suppliers in this type of value chain can be replaced at any time, as they do not have strong bonds with the buying firm and provided that another company could perform the same task for a lower price.
In this scenario, competition is examined between firms and their outcomes of the productive process and enhance competitiveness has to do with finding the flaws in the value chain in comparison to the competitor and try to fix them, also by changing suppliers. As Peppard and Rylander (2006) state: "Strategy becomes primarily from the art of positioning the firm in the right place in the value chain." What matters in this model is the role of each firm individually and the relation between firms is not meant to be long lasting nor considered to be a source of competitive advantage. This relationships are meant to last only until the point where they are beneficial to the main firm, financially wise.
With the increasing complexity of markets and products the model...

Find Another Essay On The Role of Value Chain Model

Modernizing the Bibliographic Chain Model Essay

2398 words - 10 pages 1. Introduction Technological advancements within ICT have paved the way to new and innovative methods of how information flows within a business. In the past (and currently), the Bibliographic Chain Model was a prominent source which illustrated and categorised the flow of information from an individual, or a human resource, into various kinds of formats. The main problem with the bibliographic chain, however, is that it was modelled in 1976

An analysis of porters value chain

1187 words - 5 pages To analyse the specific activities through which firms can gain a competitive advantage, it is useful to model the firm as a chain of value creating activities. For this purpose, Porter identified a range of interrelated generic activities common to a wide range of firms. The resulting model is known as the value chain.According to Porter (1985)," Competitive Advantage arises out of the way firms organise and arrange discrete activities".Through

Value chain strategies of - A Logistics industry

3820 words - 15 pages a large and comprehensive service provider. The example of the logistical value-added chain makes it clear how comprehensive the services of a well-positioned provider in our industry can be: In addition to the "classic" logistical servicesof procurement and distribution, as well as warehousing, the so-called value-added services gain increasing significance in this area. This includes services such as order processing, as well as exactly fitting

Value Chain Analysis of Social Networking Communities

2830 words - 11 pages news feeds that members send each other. These ads are charged at either a cost-per-click or cost-per-thousand-impressions. Sponsored groups allow companies to advertise on their own profile pages on Facebook. Companies can interact with a large number of users using a message board. As of September 2007, there were 186 sponsored groups existing, the most popular being Apple (FaberNovel Consulting, 2007).To explain this process, a value chain model

Value Chain Management of Walmart Inc.

2981 words - 12 pages stiff, unfriendly service of national supermarket. Opposite, Walmart have already established an image of good post-purchase service in the mind of consumers and customers take their after-sale service for granted is essential to consumer satisfaction.Walmart's value proposition is bases on offering everyday low price (dlp) this is the core of Walmart's business model. Basker (2007) stated that not only the sells convenience is associated by

The role of information systems in Supply Chain Management.

1710 words - 7 pages The role of information systems in Supply Chain ManagementIntroductionThe purpose of this essay is to explore and evaluate the various approaches that can be taken to facilitate the management of supply chains.Supply Chain Management - A terminological backgroundThe Institute for Supply Chain Management has defined supply management as "the identification, acquisition, access, positioning and management of resources an organisation needs or

The importance of the value proposition in identifying the value offered to customers, and the processes involved, are equally important to both customers and value chain partners

1454 words - 6 pages IntroductionThis paper discusses the statement "The importance of the value proposition in identifying the value offered to customers, and the processes involved, are equally important to both customers and value chain partners". Since this statement, given by Walters (2002:198), can be interpreted in different ways, the meaning is to be determined. In this paper this statement is understood as arguing that the value proposition was equally

DEVELOPMENT OF BIOMASS SUPPLY CHAIN FRAMEWORK IN THE MODEL OF MILK COOPERATIVES

1017 words - 5 pages a simulation model of biomass supply chain for bio fuel production, Renewable Energy (2012) 44 (0) (8): 380-91. 5. Z.Guan, A.B.Philpott, A multistage stochastic programming model for the New Zealand dairy industry Int. J. Production Economics 134 (2011) 289–299. 6. Raphael Riemke de Campos Cesar Leão, Silvio Hamacher, Fabrício Oliveira, Optimization of biodiesel supply chains based on small farmers: A case study in Brazil, Bioresource

The Role, Purpose, Use and Impact of Value Added Tax

1641 words - 7 pages -registered VAT companies do not have the benefit of reclaiming input tax, they are allowed to claim the full value of their VAT charge as an expense in their profit and loss account. Some companies are partially VAT-exempt. This is where a taxable person makes both VAT-rated and VAT-exempt supplies. Some of their input tax can be recovered using the following formula:(Total Taxable Supplies divided by Total supplies) multiplied by Non-attributable

The Stimulus-Value-Role Theory

517 words - 2 pages The Stimulus-Value-Role Theory has three stages of development. Stimulus, the first stage, is the evaluation of the physical attractiveness of prospective partners. The first impression towards a person is determined by the physical features, such as appearance and social qualities. If both individuals are pleased with each other's unspiritual characteristics, they might enter into the next stage.What is significant in the second stage, Value

The Role of Desire and Value in Glaucon’s Comparison of a Just and Unjust Life.

1932 words - 8 pages significant role in a perfectly unjust life. For example, Glaucon could be proposing that to be perfectly unjust we must be able to desire, and things must have the property of being valuable. However, here I will only focus on why the implicit assumption that Glaucon is trying to show, about desire being both necessary and sufficient for value in things, is not sound. First I want to show that we do not always desire things that are valuable

Similar Essays

How Does A Value Chain Analysis Model Help The Organisation Develop And Deliver Sustained Competitive Advantage?

2956 words - 12 pages of within the organisation.The value system works within the existing structure and in the main deals with internal strategies. This will leave the organisation vulnerable to unexpected external forces. Lynch (2006)Recklies (2001) claims that Porter's (1985) five external forces and value chain model are insufficient in today's competitive paradigm as they are based on the economic situation of the nineteen eighties. Although strong competition

Value Chain Analysis Of The Bodyshop

1064 words - 4 pages Value Chain AnalysisValue Chain divides activities within a firm into two broad categories: primary activities and support activities. It highlights the explorations of internal analysis of a chain of business activities and explores the role and contribution of organization's resources corresponding to primary and support activities in a cost-effective way to gain cost advantage (Lynch, 2000).4.1 Procurement:As for the Procurement in support

Role Model Of The West Essay

1614 words - 6 pages For hundreds of years, Western Civilization has flourished and become very dominate with stable and powerful nations. Reasons why the Western Civilization have become such great nations has been much attributed to the great role model, ancient Greeks for their many contributions, such as architecture, fine arts, education, philosophy, and mostly for their form of democracy and ways of government. The architecture and fine arts in ancient

The Role Of Large Chain Supermarkets

2807 words - 11 pages The role of large chain supermarkets is rapidly expanding, as suppliers of goods and services to consumers and the building of local and international economies. The current tariff laws of the United States make it a lot easier for foreign born grocery chains to operate within the United States. The extent to which they do this is highly refuted because supermarkets have an array of effects on markets and economies. However they can provide jobs