Chapter 19: Problem 10

What is splitting up the value chain?

Short Answer

Expert verified

Splitting up the value chain refers to breaking down the production process into separate, identifiable steps, including primary and support activities. This helps organizations analyze the efficiency of each activity, allowing them to identify potential improvements, optimize operations, and deliver better value to their customers. The process involves understanding the value chain, identifying key activities, analyzing efficiency, implementing improvements, and continuously monitoring and adjusting the value chain for optimal performance.

Step by step solution

Understand the value chain concept

The value chain is a concept developed by Michael Porter, which can be used to analyze an organization's production process. It consists of a series of activities that are performed by the company to create and deliver a product or service to the market. These activities include research, development, production, marketing, and customer service. #Step 2: Identifying Key Activities in the Value Chain#

Break down the process into key activities

Splitting up the value chain involves identifying the key activities within the production process. These activities can be broken down into primary activities, which are directly involved in the creation of the product, and support activities, which provide the necessary resources and capabilities for the primary activities. Primary activities include inbound logistics, operations, outbound logistics, marketing & sales, and services. Support activities include infrastructure, HR management, technology development, and procurement. #Step 3: Analyzing Efficiency and Opportunities#

Examine each activity for efficiency

After splitting up the value chain into its individual activities, the next step is to analyze the efficiency and effectiveness of each activity. This can help organizations identify potential areas for improvement, such as eliminating unproductive activities or finding ways to streamline processes. #Step 4: Fine-Tune and Optimize the Value Chain#

Implement improvements

Once potential areas for improvement have been identified, organizations can take steps to optimize their value chain. This may involve reallocating resources, restructuring the organization, adopting new processes, or investing in new technologies. #Step 5: Continuously Monitor and Adjust#

Monitor and adjust regularly

The process of optimizing the value chain is not a one-time task. Organizations should continuously monitor their value chain activities and make adjustments as needed to ensure they remain efficient and effective in delivering value to their customers. In conclusion, splitting up the value chain is a process of identifying and analyzing the key activities involved in a company's production process. This enables organizations to improve efficiency, optimize operations, and deliver better value to their customers.