value chain

Topics: Strategic management, Michael Porter, Management Pages: 5 (1472 words) Published: August 24, 2014
Value chain and globalization
The process of corporate life is always a sea change and sometimes there are high tides and sometimes are quiet times. Day to day companies are faced with new challenges, whether it be a consolidated organization or a small business just starting, always emerging issues that affect their behavior and their performance. Owing to the consequences of an impressive development of technology and globalization that we are living in this age. Nowadays are faster changes, new challenges threaten seriously survival of organizations, new foreign competitors, mobilization of capitals, difficulties in retaining human capital and changing technologies are elements that require managers to be prepared for change and have ability to motivate employees in order to have continuous renewal. “Micro and small enterprise dominated industries have been both threatened and provided with advantages as a result of dynamic trends related to globalization” (Kula et al., 2006). Value chain is not only to implement new management models that ultimately prove to be only uncertain. However, management of change consists of take advantage of changes in business environment for the interest of the organization. That is why companies should not only be flexible, but also managers should develop a keen sense to anticipate change; therefore companies will be able to achieve to be at the forefront. According to Porter (1998) “Activities provide the bridge between strategy and implementation. When strategy was defined in terms of broad positioning concepts, a clear separation between strategy and structure was meaningful and useful.” Innovation is everywhere and organizations that are not renewed will hardly be able to survive. Firstly, it should be noted that the purpose of this essay is that I want to explain what is the value chain, its impact to the companies and the impact of globalization to the value chain. Afterwards, I will explain the following seven major issues have had significant impact of globalization on the value chain.

History of the value chain and consisting
First of all, the value chain is a theoretical model to describe the development of the activities of a business generating value to the final customer. The value chain was described by Michael Porter. He defines the value as the sum of the perceived benefits customer receives of low costs to acquire and use product or service “Value is the amount buyers are willing to pay for what a firm provides them. Value is measured by total revenue, a reflection of the price a firm´s product commands exceed the cost involved in creating the product.” (Porter 1998). At the same time value chain is essentially a form of analysis of business through which a company is split up into their constituent parts, and we can seeking to identify sources of advantage. Simultaneously, it is creating the competitive advantage that is achieved when company develops and integrates activities of its value chain less expensive and better differentiated than their competitors. Therefore value chain of a company is formed by all its added value generating activities and the margins they contribute “Competitive advantage in regard to products and services takes two possible forms. The first is an offering or differentiation advantage. I f customers perceive a product or service as superior, they become more willing to pay a premium price relative to the price they will pay for competing offerings. The second is a relative low-cost advantage, which customers gain when company´s total costs undercut those of its average competitor” (San Miguel, 1996). Sometimes change times in business can generate fear, but beyond fear, managers must generate within their companies the ability to bring about change. When it comes to making changes to the companies and this usually means the introduction of new procedures, staff or ways of working that directly affect those around the...

References: San Miguel, J, 1996, Value chain analysis for assessing competitive Advantage. Institute of Management Accountants. Canada.
Staying competitive in the global economy (2008) Secretary-General of the OECD
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