Value chain analysis
The value chain analysis is a concept that allows the firm to understand the parts of its operations that create value and those that do not. Understanding these issues is important because the firm earns above-average returns only when the value it creates is greater than the costs which are incurred in creating that value. In essence, the value chain is a template that firms use to analyze their cost position and to identify the multiple means that can be used to facilitate the implementation of a chosen business level strategy (Hitt, Ireland, & Hoskisson, 2010). The value chain is segmented into primary and support activities. The primary activities are involved with a product’s physical creation, its sale and distribution to buyers, and its services after the sale. On the other hand, support activities provide the assistance necessary for the primary activities which take place.
In essence, creating value through value chain activities often requires building effective alliances with suppliers and developing strong positive relationships with customers. This often calls for one to be creative and innovative enough to ensure that various strategies and approaches which are used ensure that the business achieves its values. Some start-up firms create value by uniquely reconfiguring or recombining parts of the value chain (Hitt, Ireland, & Hoskisson, 2010). A classic example is FedEx, which changed the nature of the delivery business by reconfiguring outbound logistics and human resource management in order to provide overnight deliveries, creating value in the process.
Essentially, technology has played a major role in this approach. For instance, the internet has changed many aspects of the value chain for a broad range of firms. A key reason being that the internet affects how people communicate, locate information, and buy goods and services. The value chain concept is often used implicitly or explicitly as the basis for evaluating information technology’s role in strengthening firm operations to achieve competitive advantage. However, no competitive advantage lasts forever. Over time, rivals use their own unique resources, capabilities, and core competencies to form different values creating positions that duplicate the value-creating ability of the firm’s competitive advantages. In general, the internet’s capabilities are reducing the sustainability of many competitive advantages.
Because competitive advantages are not permanently sustainable, firms must exploit their current advantages while simultaneously using their resources and capabilities to form new advantages that can lead to future competitive success. Innovation plays a great role in enhanced value chain analysis. This is because it ensures that the business is able to exist on competitive terms and maintain a competitive edge in the running of the affairs. This is based on the fact that by creating value for the buyers, one is able to meet the demands in the market. Some of the successful strategies which have been utilized in businesses that sustain the value chain concept include the aspect such as the utilization of the internet when it comes to human resources management. In this case, the internet has been used in activities such as recruitment of competitive human resources, collection of information, which is vital in making the right strategic moves and evaluating the responses in the market. These aspects are vital when one is working towards ensuring that the major objectives of the business are achieved (Hitt, Ireland, & Hoskisson, 2010). In this case, one will be able to ensure that the business grows in line with the technological changes which are taking place.
Organizational change may be defined as the adoption of a new idea or a behavior by an organization. In a way, it involves altering an existing organization in order to increase organizational effectiveness for achieving its objectives. There are several aspects of the business which need to be factored in when working on ensuring that change is managed.
There are two main types of forces of change. These are internal forces and external forces. The internal forces are those which affect the business from within. That is, they include aspects such as a change in the size of the organization, performance gaps, employee needs, and values and the change in the top management (Nilanjan & Mousumi, 2006). On the other hand, external forces include those aspects which influence the running of the business from outside. They include technology, the business scenario, and the environmental factors.
In the current age, the rate of technological change is greater than at any time in the past. These changes are responsible for changing the nature of the job, which is performed at almost all levels of the organization. When managing change, it is the responsibility of the management team to ensure that the business adopts a flexible approach that accommodates the changes which take place (Nilanjan & Mousumi, 2006). Essentially, successful business ventures embrace these changes and ensure that they thrive in them. Some of the approaches which can be embraced in this case include educating the employees. Ensuring that the employees are aware of the changes which are taking place serves to reassure the organization that it is on the right track.
Hitt, M., Ireland, D., & Hoskisson, R. E. (2010). Strategic Management: Competitiveness and Globalization, Concepts (9th ed.). California: Cengage Learning.
Nilanjan, S., & Mousumi, S. B. (2006). Managing Change In Organizations. London: PHI Learning Pvt. Ltd.