Porter's Value Chain (Book publishing)

Porter's Value Chain (Book publishing)

1. Paragraph 1

   • The more value an organisation creates, the more profitable it is likely to be. More value provided to customers - competitive advantage is built up
   • Knowing how a company creates value and looking for ways to add more value are very important elements in developing a competitive strategy
   • 1985 book called competitive advantage Michael Porter discussed his theoy and first came up with the concept of the value chain
     • In the orginal sense, the value chain analysis involves analysis each activity from the perspective of the value it add to the final product/service, known as the margin

2. Paragraph 2

   • Value chain is a set of activities than an organisation carries out to create value for its customers. porters chain is general purpose - companys use it to examine all of their activity and see how they are connected
     • Way that value chain activities are performed determines cost and effects profits - its a tool that can assist in understanding the sources of value for an organisation
       • Porters chain focuses on systems and how inputs are changed into outputs purchased by consumers. using this viewpoint he described a chain of common activities s to all businesses - divided them up into primary and supposrt
   • Primary and support activities
     • Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service
       • They consist of inbound logistics , operations, outbound logistics, marketing and sales, and service.
     • support activities support the primary functions previously listed
       • They include procurement, human resource management, technological development and infrastructure
     • Companies use these activities as building blocks to create a valuable product or service
       • The more competitive the value chain of an organisation, the more the overall products value exceed the sum of its parts.

3. paragraph 3

   • Linked to the value chain is disintermediation and fragmentation
   • Disintermediation - within the media sectors the internet and digitisation have complicated the value chain, also, technological advances, espesically the redistribution of content can encourange the breakdown of the value chain
     • an example - MTV added a new stage to the chain - aggregation of external content and bundling them up into channels - changed concept of averaging out value across chain
       • Suggest that if competitive advantage cannot be created at a certain stage that it should be outsourced
   • Fragmentation happens when the stand alone single stages of the chain are unbundled into a number of discrete activities - can lead to extentions which elongate the chain
     • example - fragmentation in newspaper chains means that papers can distribute their content on mobile, online and podcasts

4. Paragraph 4

   • decision making
   • chain analysis is an important piece of the analytic puzzle when taking many types of strategic decision. for examole, concering economies of scale and scope, and concerning the extent of vertical intergration.
     • an example is when the ceo of aol acquired time warner through a strategy of vertical intergration which should have lead to greater economies and scope

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   • Value chain potential effectiveness - focus on book publishing - a sector where many players were traditionally motivated by a love of books rather than profit.
   • Main tasks of a publisher - to find books that people want to read, to make the books available in distribution outlets, to avoid carrying too much stock. However, falling customer demand and structural problems complicate the process

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   • Still focusing on porters chain, book publishing involves eight stages in the value chain. Normal cycle for publishing a book takes 12 months
     • involves these stages - writing, agent, packager, publishing, printing, warehouse and distribution, marketing and retailing
   • Effectiveness of the chain can be seen in the retailling stage.
     • for publishers, chains have been a mixed blessing for example, the sophisticated marketing techniques have increased book sales ( cafes and signing sessions), but the higer discounts they demand have eroded publishers margins and profits

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   • Contemporary strategic issues and recent industry development have impacted on the chain
   • main strategic issues facing the book publishing industry is the declining demand. this is dues to long term changes in reading habits - educated have become busier, the younger readers have eletronice media
     • Result is that the number of books and the percentage of the population buying has decreased.
       • fragmentation has led to the increase of Kindles, ebooks - on phones, tablets, laptops