Value Chain of Dell Computers Essay
Introduction to Value-Chain
The Value-Chain was conceptualized and popularized by Porter in 1985 through his book, a best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. The main thrust of “the value-chain” is to categorize the generic “value-adding activities” of an organization. The value-chain management tool recognizes two value-adding activities in an organization, the “primary activity” and the “support activity”. The primary activities includes the following, inbound logistics, production, outbound logistics, sales and marketing, and maintenance. Support activities include administrative infrastructure management, human resources management, …show more content…
The firms profit potential depends on its effectiveness in performing these activities efficiently. By doing so, the amount that the customer is willing to pay for the product exceeds the cost of the activities in the value chain. It is through this activity that the firm can gain the opportunity to generate superior value. A competitive advantage can then be achieved by reconfiguring the value chain to provide lower cost or better differentiation. The value-chain model is a useful analysis tool for defining a firm’s core competencies and the activities in which it can pursue a competitive advantage.
• Cost Leadership
An organization always aims to be the low-cost producer in its industry. If an organization can attain and maintain overall cost leadership then it will reach superior performance. Cost leadership can be obtained by focusing on key accounts, reaping economies of scale, controlling costs.
• A differentiation strategy
This strategy would demand an organization in offering something unique to its target customers. The uniqueness can be concerned to products, the way it delivers its goods and services, the way it markets its products or anything that shapes a customer's perception in relation to differentiation. This could be the way products and services are branded or designed and the customers perceive such offerings as