Business Strategy Questions / Value Chain Analysis - Essay Example

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The competitive forces analysis is concerned with the external environment and the various stakeholders of the firm. According to Porter, there are five competitive forces in the environment of a business entity namely the suppliers, buyers, customers, potential entrants, and product substitutes…
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Business Strategy Questions / Value Chain Analysis
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Download file to see previous pages Strategic moves in countering rivalry are by changing prices, improving product differentiation, creatively using distribution channels, and exploiting relationship with suppliers.
Buyer power also has significant implications on the operation of a business entity. Accordingly, buyers are strong if they are concentrated; they purchase a significant purchase of output: and posses a credible backward integration threat.
Suppliers are other important stakeholders. Like buyers, stakeholders are strong if they are concentrated; have credible forward integration threat; there is significant cost to switch to other suppliers; and ironically, if their customers are strong.
Barriers to entry or exit are determined by specific factors like government regulations, existence of patents or proprietary knowledge, required specific assets, and organizational economies of scale. Entry is relatively easier if the industry requires common technology, little brand franchise, access to distribution channel, and low scale threshold. Exit is easy if assets are salable, exit costs are insignificant, and when business is independent.
The concept of environment analysis will be briefly applied to Vodafone Group PLC. Rivalry is relatively high in the global mobile industry as a lot of competitors are seizing opportunities to penetrate into lucrative markets by employing aggressive strategies. Potential entrants' face relatively high barriers to entry due to high start-up costs to cover very specialized equipments and intensive advertising. Supplier power is low as providers are abundant. Buyer's power is strengthened by the presence of various competitors in the market with insignificant switching costs. Threat from substitutes is high due to low switching costs.
Environmental analysis is an indispensable tool which helps managers understand their stakeholders while helping them craft competitive strategies.
Question 2: Corporate Value Creation/Value Chain Analysis
Value chain is a high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers. Value chain categorizes the value-adding activities of an organization. This essay will identify the basic components of value a company's value chain. In order to show how a value chain is employed by managers, it will list the functions of value chain analysis as well as apply it to specific companies.
Figure 1 shows the primary and support activities in the typical value chain of a business organization. Primary activities involve those activities which start as the procurement of raw materials from suppliers to bringing them to customer. Inbound logistics involve the "receiving, warehousing, and inventory control" of the company's input. Meanwhile, operations comprise the value adding activities which transforms the raw materials into the final output. Outbound logistics are the activities which are necessary to bring the finished product to customers like storage, order fulfillment, warehousing, etc. Marketing and sales are the company's effort to attract buyers to purchase the products. Maintenance and ...Download file to see next pagesRead More
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