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BUSN 495 Exam 2 - Chapter 4
Terms in this set (39)
all of the various activities that a company performs internally
identifies the primary activities that create customer value and related support activities.
Value chain analysis
Facilitates a comparison, activity-by-activity, of how effectively and efficiently a firm delivers value to its customers, relative to its competitors
Value chain analysis
- facilitates a comparison of how rivals, activity by activity, deliver value to customers.
- Even rivals in the same industry may differ significantly in terms of the activities they perform.
- How each activity is performed may affect a company's relative cost position as well as its capacity for differentiation.
- Thus, even a simple comparison of how the activities of rivals' value chains differ can reveal competitive differences.
- entails comparing how different firms perform various value chain maintenance and then making cross-firm comparisons of the costs and effectiveness of these activities.
•How materials are purchased.
•How inventories are managed.
•How products are assembled.
•How customer orders are filled and shipped.
•How maintenance is performed.
a potent tool for learning which companies are best at performing particular activities and then using their techniques (or "best practices") to improve the cost and effectiveness of a company's own internal activities
Strategic options for Remedying a cost or value disadvantage
There are three main areas of a firm's overall value chain where cost differences with rivals can occur.
•A firm's own internal activities.
•Value chain activities performed by suppliers.
•Value chain activities performed by forward channel allies.
1) A firm's own internal activities.
2) Value chain activities performed by suppliers.
3) Value chain activities performed by forward channel allies.
three main areas of a firm's overall value chain where cost differences with rivals can occur
Improving Internally Performed Value Chain Activities
- Implement the use of best practices throughout the firm.
- Eliminate cost-producing activities by revamping value chain.
- Relocate high-cost internal activities to lower-cost areas.
- Outsource internal activities to vendors or contractors to perform them more cheaply than in-house.
- Invest in productivity-enhancing, cost-saving technology.
- Find ways around activities or items where costs are high.
- Redesign products and/or components to economize on manufacturing or assembly costs.
- Reduce costs in supplier or forward portions of value chain system to make up for higher internal costs.
Improving Supplier-Related Value Chain Activities
- Remedying Supplier-Related Cost Disadvantages
- Enhancing Customer Value Proposition
Remedying Supplier-Related Cost Disadvantages
•Pressure suppliers for lower prices.
•Switch to lower-priced substitutes.
•Collaborate closely with suppliers to identify mutual cost-saving opportunities.
•Integrate backward into business of high-cost suppliers.
Enhancing the Customer Value Proposition
•Select and retain best-quality performing suppliers.
•Provide quality-based incentives to suppliers.
•Integrate suppliers into the product design process.
Improving Value Chain Activities of Forward Channel Allies
- Combat forward channel cost disadvantages
- Improve the customer value proposition
Combat forward channel cost disadvantages by:
•Pressuring dealer-distributors and other forward channel allies to reduce their costs and markups.
•Working with forward channel allies to identify win-win opportunities to reduce costs.
•Changing to a more economical distribution strategy or integrate forward into company-owned retail outlets.
Improve the customer value proposition by use of:
•Cooperative advertising and promotions with forward channel allies.
•Training programs for dealers, distributors, or retailers to improve the purchasing experience or customer service.
•Creating and enforcing operating standards for resellers or franchisees to ensure consistent store operations.
1) improving internally performed value chain activities
2) improving supplier related value chain activities
3) improving value chain activities of forward channel allies
3 ways to remedy a cost or value disadvantage
VRIN Competitive Power Tests
•Is the resource or capability competitively valuable?
•Is the resource or capability rare—something rivals lack?
•Is the resource or capability inimitable or hard to copy?
•Is the resource or capability nonsubstitutable or is it vulnerable to the threat of substitution from different types of resources and capabilities?
VRIN Competitive Power tests
VRIN tests for sustainable competitive advantage
asks if a resource or capability is Valuable, Rare, Inimitable, and Non-substitutable.
social complexity and casual ambiguity
two factors that inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities
makes it very hard to figure out how a complex resource contributes to competitive advantage and therefore exactly what to imitate
an activity that a company has learned to perform with proficiency
an activity that a company performs proficiently and that is also central to its strategy and competitive success
what a company can make, do, or perform better than its competitors
anything you do well
anything you do well but you do those things better than anything else
an organization's strengths that distinguish it from competitors to provide superior and unique customer value and hopefully is difficult to imitate
Strength, Weakness, Opportunities, Threats
•Matched to the firm's resource strengths and weaknesses.
•Aimed at capturing the firm's best market opportunities.
Positioned to defend against external threats to its well-being
a simple but powerful tool for sizing up a firm's internal strengths and competitive deficiencies, its market opportunities, and the external threats to its future well-being
Value of SWOT analysis
1.Drawing conclusions from SWOT listings about the firm's overall situation.
2.Translating those conclusions into effective strategic actions that better match the firm's strategy to its strengths and market opportunities, correct problematic weaknesses, and defend against worrisome external threats.
Value chain analysis and benchmarking
2 useful tools for determining whether a company's prices and costs are competitive
has the potential to contribute to a competitive advantage
is it something rivals lack? like brand strength
- not capable of being copied or imitated
- is it difficult and more expensive to copy? they should be unique, built over time, or carry big capital requirements
rivals should not be able to substitute the product from different types of resources
a company's ______ should serve as the basis of its strategy
Create value for customers such as cost drives like merchandise for target and store layout
facilitate and enhance the performance of the primary activities such as site selection and hiring and training for target
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