Value Chain

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Guillermo P. Desenganio
Buisness Policy
MBA Class
Prof. Florindo C. Ilagan

Guillermo P. Desenganio
Buisness Policy
MBA Class
Prof. Florindo C. Ilagan

Value Chain and Balance Scorecard

Value Chain and Balance Scorecard

Contents
Part I: Value Chain
How does organization create value?……………………………………………………. 3 Porter’s Value Chain ………………………………………………………………………………..3
Primary Activities ………………………………………………………………………………4
Support Activities ……………………………………………………………………………… 5 Firm Level ……………………………………………………………………………………………………... 5 Industry Level ………………………………………………………………………………………………. 5 Significance of Value chain ……………………………………………………………………………7 What is Global Value Chain? …………………………………………………………………………7 SCOR ……………………………………………………………………………………………………………. 8 Value Proposition and value chain ………………………………………………………………9 Levels of market-driving strategy ………………………………………………………………..10 Cost of Value Chain in the distribution process …………………………………………… 10 McDonald’s Value Chain Analysis using Porter’s model ………………………………12 Critical Evaluation of Value Chain ……………………………………………………………….15 Part II. The Balanced Scorecard

Balance Scorecard Defined ………………………………………………………………………18 Definitions of Balanced Scorecard Strategic Planning & Management Terms18 Balanced Scorecard Perspectives …………………………………………………….20 Cause-and-Effect Logic …………………………………………………………………….22 What are the Key Benefits of using Balanced Scorecards? ………………23 References …………………………………………………………………………………………………26 How does organization create value

How do business change inputs into business outputs in such a way that they have a greater value than the original cost of creating those outputs? This isn't just a dry question: it's a matter of fundamental importance to companies, because it addresses the economic logic of why the organization exists in the first place. Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers bring together a range of products and present them in a way that's convenient to customers, sometimes supported by services such as fitting rooms or personal shopper advice. The value that's created and captured by a company is the profit margin: Value Created and Captured – Cost of Creating that Value = Margin The more value an organization creates, the more profitable it is likely to be. And when organizations provide more value to their customers, they build competitive advantage. Understanding how company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. Michael Porter discussed this in his influential 1985 book "Competitive Advantage," in which he first introduced the concept of the value chain. Porter’s Value Chain

A value chain is a set of activities that an organization carries out to create value for its customers. Porter proposed a general-purpose value chain that companies can use to examine all of their activities, and see how they're connected. The way in which value chain activities are performed determines costs and affects profits. Value chain can help understand the sources of value for the organization.

Elements in Porter's Value Chain
Michael Porter is the author of 18 books and numerous articles including Competitive Strategy, Competitive Advantage, Competitive Advantage of Nations, and On Competition. A six-time winner of the McKinsey Award for the best Harvard Business Review article of the year, Professor Porter is the most cited author in business and economics. Michael Porter’s core field is competition and company strategy. He is generally recognized as the father of the modern strategy field, and his ideas are taught in virtually every business school in the world. His work has also re-defined thinking about competitiveness, economic development, economically distressed urban communities, environmental policy, and the role of corporations in society. In addition to his...
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