Value Chain Activities - Essay Sample

Introduction

The idea of value chain was incorporated to elaborate the extensive kind of activities that are essential to establish service from initialization, through the diverse stages of manufacture, delivery to customers, and ultimately clearance after usage. Generally, it is presumed as one good move from one competitor in the chain to another. It is presumed to achieve significance. Therefore, the value chain can be the ideal means to disaggregate a corporate into main undertakings, hence, permitting the identification of foundations of competitive benefit. This idea over time has been pivotal in a fast-increasing work in finances, as well as, organization. This paper is purposed to explore examples of value chains in three firms: using cost leadership, using differentiation, and using value innovation business-level strategy.

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Businesses' top management mostly considers different marketing tactics that will have a significant effect on the profits and revenues of an organization. Cost leadership is amongst the noteworthy strategies where an organization is the most competitively priced good on the market, implying it is affordable (Rothaermel, 2017). The primary objective of cost leadership tactic is to be the lowest-cost provider in an organization's specific market. Typically, businesses that prosper with low-cost tactic portray extreme effectiveness and employing low-cost materials, as well as, resources to minimize the overall price of their service or product. There exist different noticeable examples of organizations that have employed this concept, and it has worked, and perhaps MacDonald's is amongst them. MacDonald's cost-leadership strategy was aimed at providing products at a low price (Gregory, 2017). Essentially, MacDonald's offers goods that are relatively cheaper compared to its competitors such as Arby's.

Differentiation is also another critical aspect of value chain activities. Typically, organizations need a substantive number of buyers who have a high preference for a company's product due to the fact the Company has superior value. All institutions can incorporate differentiation in all aspects of the value chain activities. Generally, primary activities comprise inbound logistics, operations, and marketing. Inbound logistics examples of sources that can be differentiated include superior incoming materials raising the quality of finished good, and timeliness of distribution to the production process (Rothaermel, 2017). Starbucks Company incorporated a differentiation strategy to compete favorably in the market. For example, Starbucks inbound logistics imply to a business's chosen coffee buyers choosing the finest quality coffee beans from producers in Latin America, Asia, as well as, Africa. Mostly, the products are procured directly from the farmers by the Starbuck purchasers (Zamora, 2016). On the other hand, the operation aspect, Starbucks controls more than 75 markets, either through licenses or direct company managed stores. Starbucks depicts outland logistics by lacking intermediaries in good retailing. Most of their goods are retailed in particular or approved stores.

Value innovation is essential in guaranteeing business success and market control. Generally, value innovation is regarded as the simultaneous search of differentiation and low cost, establishing a leap in value to both the organization and buyers. Value innovation is realized when the entire system of utility, cost, and price are aligned. The value chain is achieved through these factors because the value to buyers is derived from the offering's utility minus its price. Value innovation has been employed in various companies; however; the ideal scenario is the case of cinema operators in Belgium. In the 1960s to the 1980s, the movie theater in Belgium was fast declining (Zamora, 2016). Mostly it was dominated by videocassette recorders, and satellite, well as; many key players in the cinema operators in Canada were implementing the same strategy. However, Kinepolis the world's biggest megaplex incorporated innovation to compete favorably in the cinema niche in Belgium. Ideally, Kinepolis took advantage of other companies providing small rooms and invented big rooms having a capacity of approximately 700 seats and leaves too much space for viewers (Zamora, 2016). More so, Kinepolis incorporated big screen measuring up to 29 meters by ten meters and the others on their own bases to make sure the sound vibrations are not conveyed among screens. Imperatively, Kinepolis negated the norms concerning the use of principal city-center real estate by localizing Kinepolis in Brussels outside the ring road. These had advantages such as patrons parking for free in large, well-lit lots.

Conclusion

Conclusively, the paper has examined various activities of the value chain. It can be inferred from the paper that cost-leadership, value innovation, and differentiation are most employed value chain activities. The article has highlighted value innovation to be essential in aiding a company to leverage competitively in the market. The paper has used an example of Kinepolis to expand more on value innovation. Similarly, the article has used MacDonald's company to illustrate a cost-leadership strategy. All of the strategies highlighted from the paper has a main objective of guaranteeing the business succeeds and compete favorably in the highly competitive business market. For companies to succeed they need to put into place ideal value chain activities and strategies.

References

Gregory. L. (2017). McDonald's Generic Strategy & Intensive Growth Strategies. Retrieved from: http://panmore.com/mcdonalds-generic-strategy-intensive-growth-strategies

Rothaermel, F. T. (2017). Strategic management concepts (Custom 3rd ed.) New York, NY: McGraw-Hill.

Zamora. E. (2016). Value Chain Analysis: A Brief Review. Asian Journal of Innovation and Policy. 5. Pp. 116-128. DOI 10.7545/ajip.2016.5.2.116.