Value Chain Analysis
Value Chain Analysis refers essentially to the differentiation between a given commercial organization in comparison to its competitors. The differentiation can and should be within product or service proficiency and quality or price advantage.
The product proficiency and comparably superior quality refers to the conceptual or perceived greater value compared to the competitors’ product line. Similarly, the price advantage refers to conceptual or perceived lower cost in comparison to competitors. Nevertheless non of the theoretical advantages have to be real or tangible due to the fact that perception plays a great role.
Moreover, those activities that lead to value creation and value maintenance are designed to achieve a competitive edge which in turn is geared toward greater profitability as well as quantitatively greater market shares. However, those activities may or may not be limited to internal organizational efforts, rather than a combination of internal as well as external component which may or may not be classically managed or organized.
In order to conduct proper value chain analysis the comparisons of the given values have to be in sync and identical i.e. the comparison of value has to be conducted in consistent manner on product and services that are virtually similar. Such approach that eliminates potential flaws in data collection and analysis may contribute to a greater accuracy in the overall outcome as well as potentially less complicated yet more effective implementation.
Nevertheless, it is important to point out that though the theoretical aspects of value chain management and analysis make for a great hypothetical learning experiences, the real world implementation is not as flawless; factors such as lack of identical products and services for comparison purposes, lack of price comparison because of fluctuation in local economy and currency, cash flow and budgeting, diversion from traditional return on investment approach as well as local and internal conflicts contribute to a more problematic process.
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