A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product orservice for the market. The concept comes from business management and was first described and popularized by Michael Porter in his 1985 best-seller
The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
Value Chain Analysis
Nota:
A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product orservice for the market
The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits
Value Drivers of e-Commerce
Novelty
Nota:
potential of innovations to add value to the value chain through the introduction of new products or services, structuring of transactions, new methods of production, distribution, marketing, or the tapping of new markets
Lock-In
Nota:
A lock-in strategy prevents the migration of customers and strategic partners to competitors so as to facilitate repeat transactions by using strategies such as loyalty programmes.
Complementaries
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Complementarities increase value by enabling revenue increases through offering bundles of complementary products and services, whether online or not, to customers
Efficiency
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achieved when (i) information asymmetries between buyers and sellers are reduced through the supply of more up-to-date and comprehensive information; and (ii) the cheap interconnectivity of virtual markets is leveraged to enable faster and more informed decision-making
Internet activities that add value
Search
Nota:
process of gathering information and identifying purchase options
Transaction
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process of completing the sale, including negotiating and agreeing contractually, making payments, and taking delivery
Evaluation
Nota:
process of considering alternatives and comparing the costs and benefits of various options
Problem Solving
Nota:
the process of identifying problems or needs and generating ideas and action plans to address those needs
Business Model [5]
Design*
Functionalities*
Nota:
articulating the value proposition;
identifying a market segment;
defining the structure of the firm’s value chain;
specifying the revenue-generation mechanisms(s) for the firm;
describing the position of the firm within the value network; and
formulating the competitive strategy to gain advantage over rivals..