Value Chain Analysis
Consider the following scenario:
Miguel owns a Mexican restaurant. He has well-established relationships with local suppliers and has
fresh produce delivered daily. Carefully trained cooks craft authentic Mexican food in state-of-the-art
kitchen using a well-refined and systematic process. They interact seamlessly with fast, friendly wait staff
who typically deliver food in fifteen minutes or less to hungry customers. Customers come in large
numbers for good food at a good price. Miguel carefully tracks customer preferences to alter menus and
offer specials.
Despite being a small business, Miguel has successfully coordinated various internal activities and
established external relationships in ways that create value for his customers.
A well-functioning work team carefully assesses the strengths and weaknesses of each team member,
assigning activities to leverage their individual strengths. However, team members also carefully
coordinate tasks to ensure they combine their individual efforts in effective ways. Effective organizations
do the same by carefully selecting a strategy that maximizes the strengths in performing various activities.
They exploit relationships between internal activities to create a chain of activities that maximizes the
VALUE CHAIN ANALYSIS 2
value of their product or service for customers. Companies large and small can derive additional benefit
from combining a strong internal value chain with those of external partners to establish a value system.
To prepare, select a company with which you are very familiar or for which you can easily obtain
information. You may wish to use the organization you are thinking of proposing for the Sustainable
Solutions Paper (SSP), which you will complete throughout the course. This would allow you to repurpose
information from the Discussion for a portion of your SSP. If you wish to take advantage of this
opportunity, please review the SSP template located in this week�s Learning Resources to ensure the
organization you choose for this Discussion also satisfies the SSP requirements. Review this week�s
Learning Resources, particularly Exhibit 1 in Porter and Millar�s article �How Information Gives You
Competitive Advantage.� You can use this chart to guide your value chain analysis for this post.
Critique discussion #1� analyses by identifying additional strengths and weaknesses of the analyses and
offering suggestions for addressing those weaknesses.
�Offer insight into additional potential linkages among areas of the value chain in your colleagues�
organizations that they may have overlooked, and ask a question to expand their thinking on the subject.
�Offer additional insight into the potential strategic significance of the value chain in your colleagues�
organizations and ask a question to expand their thinking on the subject.
�Answer one of the questions posed by your colleagues in their posts.
VALUE CHAIN ANALYSIS 3
Since value chain reach beyond the boundaries of individual businesses, in which
areas would BIDCO collaborate with other organizations as it implements its sustainability
strategy?
BIDCO should partner with research market companies such as Nielsen and IRI for
research and development of the company. Although the company conducts basic research that
benefits numerous customers, the primary goal should focus on applied research. Applied
research looks at short-term programs such as successfully building new product lines. This
proves to be the strength of these research firms in that this method of research is less costly than
the basic research, and less dangerous due to the short-term nature. Moreover, research market
companies such as Nielsen provide the needed information from the market and customers,
which assist the management to avoid risk and invest in necessary places.
The firm should also have a good partnership with other companies that produce its raw
materials, especially in near places to avoid excess production costs. These are inbound logistics
that ensure there is a constant supply of raw materials to maintain the production. The company
has been importing its crude oil from Malaysia, a situation that reveals there is little of its raw
material in Africa. In this manner, the company should partner with some agricultural firms
within its locality to produce the raw materials. When this is done, there will be an enormous
reduction of production cost.
Lastly, just like other big companies, BIDCO should collaborate with big bodies that host
global events. For example, Coca-Cola Company sponsors several events such as Big Brother
Africa, world cup, and many others. It is time for the company to collaborate with bodies such as
VALUE CHAIN ANALYSIS 4
FIFA, WHO to sponsor some of the activities. Hall (2013) says that the only way to penetrate
through this tough business competition, one has to locate the prominent customers.
VALUE CHAIN ANALYSIS 5
References
Hall, R. (2013). Brilliant marketing: What the best marketers know, do and say. London, UK:
Pearson UK.
Petkus, E. (2013). Value-Chain Dynamics of the West Point Foundry, 1817-1911: A Historical
Case Analysis in Marketing. Marketing Education Review, 23(3), 275-280.
VALUE CHAIN ANALYSIS 6
Nike has dominated the athletic retail business in all categories. How can other
companies such Adidas improve to compete with Nike?
Other companies such as Adidas should obtain many suppliers in the industry to
neutralize the effect of Nike in the market. According to Aaker (2011), very little suppliers in the
market make bargaining power non-existent. Rubber, leather, and cotton commodities should be
abundant in the market with the brand name of other companies. The firms should also be able to
switch between the available suppliers cheaply and quickly hence the suppliers will become
dependent on the company for their survival.
The firm should put a lot of emphasis on the 4Ps, which are the product, price,
promotion, and place. These are very vital components of dominating the market according to
Aaker (2011). For a product, the companies should provide good quality and comfortable shoes
and outfits that fit the players through research and development. For the price, Nikes
competitors should have a pricing strategy for every group of consumer. The price of the items
varies depending on the design and edition of the sports gears. For the place, they should open
discount outlet stores in rural areas and retail shops where they are less known. Selling in
different places will assist them to handle the different needs of the customers. For the
promotion, they should not only cut the discounts but also participate in the sporting activities by
rewarding and sponsoring those events.
Just like Nike, other companies should have both management and independent directors.
The combination of the directors will benefit the companies in that there will be a presence of
managers who are directly and indirectly involved with the company. The indirectly involved
managers bring outside experiences that provide another frame of reference. The directly
VALUE CHAIN ANALYSIS 7
involved board is classified as an oversight board, engaging in active roles with strong regards to
the management in point of strategy formulation. They also check market trends based on
research work and development (Ahenkora, 2012).
VALUE CHAIN ANALYSIS 8
References
Aaker, D. A. (2011). Developing Business Strategies
Ahenkora, K. (2012). Qualitative Value Chain Analysis and Strategic Choices. International
Journal Of Business Management & Economic Research, 3(1), 429-431
