Step 2: Outline the Company's Value Chain: To achieve its strategic
goals, any business must engage in certain strategically required
activities. For example, Einstein Medical must devise and introduce
new medical services. Microsoft must write new computer
programs. Each such activity requires certain employee behaviors.
Einstein Medical needs employees who have the expertise to help
it devise new medical services, for instance. The point is this: any
manager who wants to understand what employee behaviors are
essential for his or her firm's success must first understand what
the firm's required activities are.
For this, value chain analysis can be useful. The company's value
chain "identifies the primary activities that create value for
customers and the related support activities." We can think of any
business as consisting of a chain of crucial activities. Each activity
is part of the process of designing, producing, marketing, and
delivering the company's product or service. These activities might
include bringing supplies and materials into the company's
warehouse; bringing these materials to the shop floor and
designing the product to customers' specifications; and the various
marketing, sales, and distribution activities that attract customers
and get the company's product to them. Outlining the company's
value chain shows the chain of essential activities. This can help
managers better understand the activities that drive performance in
their company. In other words, it is a tool for identifying, isolating,
visualizing, and analyzing the firm's most important activities and
strategic costs.Value chain analysis is more than just a tool for identifying the
ways things are done now. It prompts questions such as: "How do
our costs for this activity compare with our competitors?" "Is there
some way we can gain a competitive advantage with this activity?"
"Is there a more efficient way for us to deliver these services?"
And, "Do we have to perform these services in-house?" Outlining