How to apply the value chain? Activities and Linkages

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Value Chain (Porter) > Best Practices > How to apply the value chain? Activities and Linkages

How to apply the value chain? Activities and Linkages
The value chain has two types of activities which are the primary activities and the support activities. I can remember all the elements in these two activities. However I have difficulty in applying them. Are there any linkages between these two activities?

Linkages are Key
The linkages are the key. Wal-Mart is a great example. Their distribution network is "inbound logistics." However, they gain great leverage by linking it to their IT capability. The linkage is the key to the model.

Value Chain Activities
V good question

Primary and Support Activities
According to Porter, the primary activities are involved in the physical creation of the product and its sale and transfer to the buyer as well as after-sale service.
The support activities support the primary activities and eachother by providing purchased inputs, technology, human resources, and various firmwide functions.
You need to disaggregate the 9 activities to the degree that is relevant for achieving the competitive advantage (differentiation or cost leadership).
Now, competitive advantage can derive from:
1. the primary activities
2. the support activities
3. the linkages among activities (internal linkages within the firm, and external or vertical linkages with others firms).

How Value Chain can be used for Cost Advantage
Jaap de Jonge, Editor, Netherlands
In his book Competitive Advantage, Porter gives a detailed description of a Strategic Cost Analysis Process in which the Cost Drivers of value activities are analyzed as well as their interactions and their Cost Dynamics (changes in drivers over time) to create a cost leadership or differentiation strategy.

Creation of Cost Advantage from Value chain
Sidra Lodhi
The basis purpose of doing Value chain Analysis is to reduce the cost and developing the competitive advantage. So emphasize will be on reducing the cost of primary as well as support activities.

The Value is in the Linkages
James Gunn
The linkages are often where the value is created. In my experience, look for improvements between organisations, along the value chain, first within primary activities and then between secondary and primary activities (in that order).
Don't forget adding value as well as reducing cost and don't just reduce cost - you may destroy value in your offering !

Extend the Value Chain Model with the APQC Process Classification
Arthur Panton, Consultant, Kenya, Member
It is useful to augment Value Chain classification with the APQC Process Classification Framework. In my experience, the Value Chain serves as the Domain definition to which the processes are assigned. It is not always cast in stone, some enterprises may assign some Purchase activities to the Support Domain, others to the Primary Inbound Domain. Flexibility is required, but the results can be very powerful. Especially for enterprises in growth stages.

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Value Chain (Porter)
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Value Chain (Porter)
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