What Is Value Chain Analysis What Does a Firm Gain When...

Developed by Michael Porter , Value Chain Analysis is an analytical framework that is used to analyse relationships between various parts of operations and the manner in which each part adds value to contribute to the level of revenues. Value Chain Analysis the business activities are divided into two categories: primary activities and support activities. The primary activities directly deal with the creation of products or services, whereas, support activities can be used to obtain or increase competitive edge in the marketplace. Primary activities: Inbound logistics; Operations; Outbound logistics; Marketing and sales; Service. Support activities: Infrastructure activities; Technology; Human resource management and development.†¦show more content†¦For Pacific Coffee it would be coffee beans and raw food items, as well as fixed assets such as buildings, machinery etc. Part A 2 a) Cost Leadership Strategy A firm chooses a cost leadership business strategy focuses on gaining advantages by reducing its costs to below those of all its competitors. This does not mean that this firm abandons other business or corporate strategies. Cost Leadership and Five Forces Mode Assignment 1 Lu Janet Tao S05001741 A. Cost Leadership and the Threat of Entry 1) It helps to reduce the threat of new entrants by creating cost barriers to entry 2) New entrants may have to invest heavily to reduce their costs prior to entry 3) New entrants will enter using another business strategy rather than attempting to compete on cost. B. Cost Leadership and the Threat of Rivalry The threat of rivalry is reduced through pricing strategies that low-cost firms can engage in and through their relation impact on the performance of a low-cost firm and its higher-cost rivals. C. Cost Leadership and the Threat of Substitutes High-cost firms may have to charge high prices to cover their costs, thus making substitutes more attractive , cost leaders can keep their price low and still earn normal or above-normal economic profits. D. Cost Leadership and the Threat of Powerful Suppliers 1) A cost leaderShow MoreRelatedEvaluating The Cost Structures Of A Firm And Determine The Reason For Expenses Increasing991 Words   |  4 Pagesshifts can either work effectively or ineffectively. Managers pursue many approaches to find the most effective route to successfully implementing a strategic plan for increasing a firm’s financial position. 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