Netflix Value Chain
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What is Value Chain? Value Chain Definition, its Management and Analysis - AIMS UK
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The concept of the value chain comes from a business management perspective. Value chain managers look for opportunities to add value to the business. They may look for ways to cut back on shortages, prepare product plans, and work with others in the chain to add value to the customer. There are five steps in the value chain process. They give a company the ability to create value exceeding the cost of providing its goods or services to customers. Maximizing the activities in any one of the five steps allows a company to have a competitive advantage over competitors in its industry. The five steps or activities are:. In order to help streamline the five primary steps, Porter says the value chain also requires a series of support activities.
These include procurement, technology development, human resource management, and infrastructure. A profitable value chain requires connections between what consumers demand and what a company produces. Simply put, the connection or sequence in the value chain originates from the customer's request, moves through the value chain process, and finally ends at the finished product. Value chains place a great amount of focus on things such as product testing, innovation, research and development , and marketing. The supply chain comprises the flow of all information, products, materials, and funds between different stages of creating and selling a product to the end user.
The concept of the supply chain comes from an operational management perspective. Every step in the process—including creating a good or service, manufacturing it, transporting it to a place of sale, and selling it—is part of a company's supply chain. The supply chain includes all functions involved in receiving and filling a customer request. These functions include:. Supply chain management is an important process for most companies and involves many links at large corporations. For this reason, supply chain management requires a lot of skill and expertise to maintain.
The main stakeholders in value chains are shareholders and investors, while supply chain partners are crucial stakeholders in the supply chain. While many people believe logistics—or the transportation of goods—to be synonymous with the supply chain, it is only one part of the equation. The supply chain involves the coordination of how and when products are manufactured along with how they are transported.
The primary concerns of supply chain management are the cost of materials and effective product delivery. Proper supply chain management can reduce consumer costs and increase profits for the manufacturer. Michael Porter. Free Press, Business Essentials. Top Stocks. Financial Analysis. Your Money. Personal Finance. Your Practice. Moreover, the logistics of having this work take place while customers are still shopping sends the strategic message that "we're all in this together.
Here's an example of how a company could apply the value chain creatively. In primary activity number two above, "converting raw materials into finished product" is cited as an "operations" activity. However, because converting raw materials is not an aspect of the supermarket industry, we can use operations to mean any other regular grocery store function. So, let's substitute "product development," as that operation is critical for Trader Joe's. The company selects its products carefully, featuring items that you generally can't find elsewhere.
Its private-label products account for more than 80 percent of its offerings, which often have the highest profit margins , too, as Trader Joe's can source them efficiently in volume. Outbound logistics. Many supermarkets offer home delivery, but Trader Joe's does not. Yet here, we can apply the activity of outbound logistics to mean the range of amenities that shoppers encounter once they are inside a Trader Joe's store.
The company has thought carefully about the kind of experience it wants us to have when we visit its stores. Among Trader Joe's many tactical logistics are its in-store tastings. Usually, there are a few product tastings happening simultaneously, which create a lively atmosphere, and often coincide with the seasons and holidays. The tasting stations feature both new and familiar items that are prepared and served by staff. Marketing and sales. Compared to its competitors, Trader Joe's barely does any traditional marketing. However, its entire in-store experience is a form of marketing. The company's copywriters craft product labels to appeal specifically to its customer base.
Trader Joe's' unique branding and innovative culture indicate that the company knows its customers well—which it should, as the firm has actually chosen the type of customers it prefers and has not deviated from that model. Via this indirect marketing of style and image, Trader Joe's has succeeded in differentiating itself in the marketplace, thus sharpening its competitive edge. Customer service is paramount for Trader Joe's. Generally, you see twice as many employees as shoppers in their stores. Whatever work they are doing at the moment, the friendly, knowledgeable, and articulate staff are there primarily for you. Employees welcome shoppers' interruptions and will instantly rush to find your item or answer your question.
In addition, the company has always employed a no-questions-asked refund program. You don't like it, you get your money back—period. This list could go on and on before ever reaching the four support activities cited above, as Trader Joe's is a wildly successful example of applying value-chain theory to its business. Trader Joe's. Accessed Sep. Business Essentials. Financial Analysis. Top Stocks. Your Money. Personal Finance. Your Practice. Popular Courses. Business Essentials Guide to Mergers and Acquisitions. Business Business Essentials. Table of Contents Expand. What Is a Value Chain?
Understanding Value Chains. Components of a Value Chain. Examples of Value Chains. Key Takeaways A value chain is a step-by-step business model for transforming a product or service from idea to reality. Value chains help increase a business's efficiency so the business can deliver the most value for the least possible cost. The end goal of a value chain is to create a competitive advantage for a company by increasing productivity while keeping costs reasonable.
The value-chain theory analyzes a firm's five primary activities and four support activities.
