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Value Chain as Competitive Advantage Essay Sample

Value Chain as Competitive Advantage Pages
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Industries have in the earlier years concentrated on enhancing the supply chain activities in search of creating value. Nonetheless, optimizing these activities, only can lead to operative proficiency and not structural effectiveness. Contritely, when an organization, focus on growing their business through the value chain the organization has the opportunity to accomplish operative effectiveness and do not have to negotiate their operative competence. The value chain is designed to not only eliminate activities that do not augment value to their businesses but also grants incremental provision through their frame, human resource, technology, and investments. The value chain is the groundwork for constructing competitive advantage, growth and expansion. (Putnaik & Sahoo, 2009). According to Walters & Rainbird (2007), the sheer existence of a competitive viewpoint does not warrant achievement, it is critical that businesses have value distribution sustainability. Review of Concepts

According to Lu & Hung (2010), the competiveness of a firm is dependent upon the competiveness of the value chain in which it belongs. The evaluation of the critical concepts that a value chain creates is vital to the competitive edge of the firm. A firm that effectively creates their value chain will have an gain on a firm that does not comprehend the significance of a value chain. An organization must appreciate the importance of their customers and recognize that they are a vital part of their value chain. This can be done by: • Creating and distributing superior customer value – this is achieved by creating/and or strengthening the connection between customer value (expectation and delivery) and organization financial performance and competitive advantage. • The customer’s value to the firm – primary focus is on the value outcome to the organization by providing competitive superior customer worth. • Customer and shareholder value – this theory is reached by the recognition that customer value pushes shareholder value. (Walters & Rainbird, 2007).

Value Chain
The value chain is a noteworthy business standard that can be beneficial to an organization or business. Michael Porter first presented the value chain as products and services that evolve from the moment they enter into the business until it exits. Although the main purpose of a business is to make a profit, the value chain is also a customer centered perception as well. (Shreiner, 2008).

According to Walters and Rainbird (2007), an effective value approach takes an organization beyond their margins. It also details recognition of core aptitudes necessary to contend, produce and transport customer value expectations and synchronization of the value production procedure. The added worth in the value chain also is a competitive matter as far as customer gratification is concerned. Competitive Advantage

Michael Porter used the term “value” to epitomize the contribution of each activity to create a competitive advantage. This is measured by the difference between the price in the market (what the consumer is willing to pay) and the operational costs and events. The solitary business profit is the total adjustments between the sum of the values of the various activities and their costs. (Guy, 2011).

Since we are in a global world, sustaining the competitive advantage is vital to a prosperous business. In order to safeguard the competitive edge it is imperative that a business have an effective supply chain management practice. Supply chain management basically means that a business incorporate their activities by refining their chain associations to maintain their competitive advantage. (Gilaninia, 2011).

Another technique that companies can gain the competitive advantage is through outsourcing their products and services. This of course, is an intense debate and there is mixed feelings about this subject. Outsourcing can be a good business strategy because it can expand efficiency, reduce operational costs, upsurge productivity, speed up product development, and likewise allow companies to focus on their core capabilities. (Mourdoukoutas, 2011).

For many companies outsourcing has made the difference between the company staying in business or going into bankruptcy. Nevertheless, there are restrictions to outsourcing which can bring “unintended consequences.” If these concerns are not addressed, these “unintended consequences” can convert into a corrupt business strategy. (Mourdoukoutas, 2011). Customer Delight

For decades the foremost emphasis of business managers has been the quest of customer satisfaction. However, in an increasing competitive atmosphere, organizations have come to realization that customer satisfaction is not sufficient; but rather that delighting the customer is the key to longevity. (Yang, 2011).

The core of an organization is the customers. If a business does not have customers, they will not have any revenue, profit or market value. Therefore, many companies have enhanced their customer service departments and also use surveys and questionnaires to help them measure their performance. Companies are mindful that customer delight is a substantial driver for their long-term success. This involves companies being conscious of the fact that their ability to answer customer’s needs rapidly and effectively governs their future. (Yang, 2011). Inter-relationship of Concepts

The connection between the value chain, competitive advantage and customer delight is the customer. One of the most significant duties of a business is to detect the facets of the customer values drivers. This can be accomplished through value production feasibility which is a sufficient correspondence of the customer value expectation and customer satisfaction observations. This also can be a competitive possibility position that can be a pivotal point for businesses to meet their customer and market prerequisites which can add value to their firm. (Walters & Rainbird, 2007).

The association of the value chain, competitive advantage and customer delight is a vital part of a company’s strength. Each link is reliant upon each other. It is also imperative that the business amplify the value chain for their merchants, suppliers, and customers. (Putnaik & Sahoo, 2009). Good service qualities require that a business address queries, needs and requests of customers. When a business engages in customer delight they are going beyond the call of duty by providing superior service and quality to customers than anticipated. (Yang, 2011). Examples of Successful Companies

Wal-Mart achievement is attributed to their strategic concentration and emphasis of the key elements of the value chain. Over the past decades, Wal-Mart has become one of the leading retailers in the globe due to the fact that they have redefined the industry’s value chain and have maintained the competitive advantage of their rivals. Wal-Mart also has catered to their customer’s needs by offering “everyday low price.” This consistency in their prices and product quality preserves customer’s loyalty. (Dess & Pickens, 1999).

Target also has been very successful with the implementation of the three components addressed in this paper. Some of the critical success factors of Target have been its location, pricing, diversified merchandise mix, and promotion. Target also emphasizes cost control, purchasing efficiency, distribution and operational of low-overhead facilities. (Dess & Pickens, 1999). Example of Unsuccessful Company

An example of a company that did not link the value chain, competitive advantage and customer delight was the retail grocery chain Food Lions in the 1990s. They were uncovered on the ABC’s Prime Time Live charging them with employee exploitation, misrepresenting their package dates, and insanitary meat handling procedures. The store managers lacked the resources and elasticity to answer to the enormously competitive absorbed environment. Food Lions competitive position nose-dived with the Prime Time Live report and controversial issues. (Dess & Pickens, 1999).

The foundation of Food Lion’s catastrophe was their narrow-mindedness of what the organization was trying to achieve. They were so captivated with cutting cost that they did not focus on their value chain, competitive advantage or customer delight. Their nearsightedness of outrageous cost cutting schemes caused their company’s failure. (Dess & Pickens, 1999). Conclusion

An organization that does not grasp the significance of a value chain in their firm will not be effective in sustaining the competitive advantage long term. A successful organization comprehends the impact of a customer-centered strategy. Although, a business main focus is to make a profit, failure to adhere to the requests of their customers will be their demise. The interrelationship of the firm’s value chain, competitive advantage and customer delight is cohesive to the firm’s forte. The competitiveness of a firm is reliant upon the value chain in which it belongs and also how quickly they respond to a customer’s demands and needs.

References

Dess, G. & Pickens, C. (1999). Creative competitive (dis)advantage: learning from Food Lion’s freefall. Academy of Management Executives, 13(3). Gilaninia, S. (2011). The impact of supply chain management practices on competitive advantage. Interdisciplinary Journal of Contemporary Research in Business, 3(6). Guy, A. (2011). Entrepreneurship and the value chain: Importance, risks and suggestions. Advances in Management, 4(6), 63-65. Lu, W. M. & Hung, S. W. (2010). Assessing the performance of a vertically disintegrated chain by the DEA approach-a case study of Taiwanese semiconductor firms. International Journal of Production Research, 48(4), 1155-1170. Mourdoukoutas, P. (2011). Unintended consequences of outsourcing. Forbes. Retrieved from: http://www.forbes.com/sites/panosmourdoukoutas/2011/12/09/the-unintended-consequences-of-outsourcing. Putnaik, R. & Sahoo, P.K. (2009). Understanding

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