Primary and Support Activities of the Value Chain - Case Study Example

Porter’s Value Chain Analysis Value chain Analysis The concept of Value chain was developed by Michael Porter to assist the organisations in developing a chain of activities for assessing the E-business requirements of an entity. In simple terms, value chain analysis is defined as a technique utilised by businesses for achieving competitive advantage through the development of an effective strategy in which all the activities of an organisation are synchronised and integrated (David, 2012).

This approach makes sure that all activities performed by a business in designing, manufacturing, marketing, delivering and supporting the offerings add value to the final product so that the customers feel valued. Primary and support activities of the value chain The value chain activities are classified into primary and support activities which further comprise of additional components: 1. Primary Activities – These are directly related to the creation and delivery of the product. a. Inbound Logistics – Related to the receiving, storage and distribution of the inputs. b. Operations – Transformation of inputs into the finished offerings. c. Outbound Logistics – Collection, storage and distribution of the products to consumers. d. Marketing & Sales – Development of ways in which consumers are informed about the latest offering so that they can purchase. e. Service – Activities undertaken for maintenance or enhancement of the offering’s value. 2. Support Activities – These are indirectly involved in production for enhancing the efficiency. a. Technology – Designing and implementation of an IT infrastructure for efficient performance of the business. b. Infrastructure – Building systems to manage the business activities. c. Procurement – Purchasing the inputs. d. Human Resource – Developing an effective and loyal workforce.

One important component of the concept is profit margin which is defined as the difference between the Total Revenue (Value) and Total Cost (Primary and Support) (David, 2012). Models of Information Systems (IS) In order to develop the best IS systems, three models are developed and implemented in the organisations i.e. financial systems, operational systems and strategic systems (David, 2012). The first one is mainly concerned with the financial aspects of the organisation; the second one is developed for managing the business operations; and latter one which is popular among all modern firms assures that IT is integrated in the strategy so that it can strengthen its E-business performance.

The strategic systems are widely used by the firms as they incorporate other two systems for enhancing the holistic performance of the organisation (Reji, 2013). Impact of information technology on organisations The latest trend in the market is of creation of value systems which develop the Value chain on competent IT systems. With the help of an efficient and strategic IT system, there is a connection between the systems plan and business plan of an organisation. This strategic system permits the companies to align the IS with strategic business opportunities.

As a result, the information is shared quickly, decisions are made strategically and firm’s growth becomes positive which is even evident in increase in profitability (David, 2012). Significance of IT on CompuTech-Systems CompuTech-Systems should consider the option of developing a value chain system so that it can handle the issues faced in its operations such as time lagging, delays in orders, ineffective communication with customers and etc. With the help of an integrated value system, the company will be able to perform the business operations electronically.

Also, the alignment of business strategy with IT system will allow the firm to manage its operations effectively and attain a competitive edge within the industry. Enterprise Resource Planning (ERP) and Porter’s value chain ERP system when integrated with Porter’s value chain supports an organisation in carrying out the business activities with excellence. For E-businesses, this model is of significant value as the primary and support activities of the value chain are automated. Moreover, the analysis of the value systems identifies the prospective aspects for utilising the IT system so that information can be exchanged electronically across the supply chain.

This synchronisation supports the firms in creating collaborative and integrated strategic system by aligning the business strategy with its objectives (David, 2012). References David, F.R., 2012. Strategic Management: A competitive advantage approach. 14th ed. USA: Prentice Hall. Reji, E.M., 2013. Value chains and small enterprise developments: Theories and praxis. American Journal of Industrial and Business Management, 3(1), pp. 28-35.