Which of the following are among the primary activities of a firms value chains?
The value chain gives you the tools to maximize your company’s value and profit margin by evaluating all business activities. Show
By Donny Kelwig, Contributing Writer Published March 21, 2022
Every executive in the world spends part of their day wondering how to make their products and services stand out while still turning a profit. That’s the dream of all businesses: create great products and earn a lot of revenue. Though it’s easy to articulate, it’s not easy to accomplish. So what’s the secret ingredient—the difference between the companies that rise to the top and those that crash and burn? Companies succeed or fail for various reasons, but one of the most powerful reasons is their competitive edge. Value chain is a model that helps companies determine their competitive edge and then refine their business practices so they’re operating with maximum efficiency and the largest possible profit margins. If you’re wondering how all that gets accomplished, keep reading. In this piece, we cover:
What is a value chain?Value chain is a business model used to examine all company activities involved in taking a product or service from idea to sellable item. Ideally, companies can use the value chain model to strengthen their point of view and widen their profit margin—more efficiency, fewer costs. Generally speaking, there are two ways to improve the “value” in your value chain:
By either improving value or decreasing costs based on your company’s value chain, you create a competitive advantage in the market and hone your sales strategies. Components of Porter’s value chainThe industry’s current understanding and model of the value chain comes from Michael Porter’s 1985 book, Competitive Advantage. Considering how quickly trends move in sales, the fact that we still use this model speaks to how well it works and how much it’s benefitted companies over the years. Porter breaks value chain analysis (VCA) into five primary activities and four secondary activities that together create value greater than the cost of performing those activities individually. That premise makes sense: profit is created when the overall cost of producing your product is less than the amount you sell that product for. However, many companies fail to diligently track every aspect of product creation and therefore miss opportunities to increase profit margins. The VCA chart is broken into two sections: primary activities and secondary (or support) activities. Primary activities focus on the manufacturing of goods and services while secondary activities back up primary activities. Primary activitiesPrimary activities include:
Secondary activitiesSecondary activities include:
The key to a successful value chain analysis is figuring out which processes could be run more efficiently and implementing fixes in a timely fashion. Benefits of value chainsThe value chain framework enables your company to understand and analyze where cost efficiency is good or poor within the organization. When you look at your company’s value chain analytically, you can:
It might seem like a lot of work to review every single company activity to determine competitive advantage, but that insight makes a difference. Just as KPIs and reporting inform your sales decisions, a comprehensive value chain analysis informs decisions across your entire business. Improve your sales processA good sales process is the foundation of any successful sales organization. Learn how to improve your sales process and close more deals. What are the primary activities in Porter's value chain?According to Porter, competitive advantages come from the processes a company has, such as marketing. The five key (primary) activities that generate higher profits include inbound logistics, operations, outbound logistics, marketing and sales, and services.
What are 5 the steps in value chain? Collect the raw data and information;. Identify entities and process functions;. Connect the entities and functions;. Value the links in the chain; and.. Create a diagram for documentation.. Which of the following is not a primary activity in a firm value chain?The correct answer is D) procurement. This option is correct because procurement is one of the secondary activities of the value chain.
What is a primary activity of the value chain quizlet?The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales, and services (maintenance).
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