1. How does value chain analysis help you understand outsourcing decisions? In your opinion, how do companies typically make outsourcing decisions? How should they make them? (A reply of 200 words). 2

Are you pressed for time and haven’t started working on your assignment yet? Would you like to buy an assignment? Use our custom writing services for better grades. Even if your deadline is approaching fast, our writers can handle your task right when you need it.


Order a Similar Paper Order a Different Paper

1. How does value chain analysis help you understand outsourcing decisions? In your opinion, how do companies typically make outsourcing decisions? How should they make them? (A reply of 200 words).

2. To build uniqueness, firms need core competences. How can firms build core competences? What are some of the challenges in building uniqueness? (A reply of 200 words)

1. How does value chain analysis help you understand outsourcing decisions? In your opinion, how do companies typically make outsourcing decisions? How should they make them? (A reply of 200 words). 2
Topic 3b Internal Environment – Value Chain Analysis Value Chain Analysis • Value Chain ➢ A sequential process of value -creating activities within the firm, within an industry, or in the economy • Products and services are outcomes of activities performed by businesses. • Value is determined by the amount that buyers are willing to pay for what a firm provides them • Value Chain Analysis: ➢ Allows managers to understand the parts of its operations that create value (keep in -house) and those that do not (outsource) ➢ Allows managers to understand how their activities create value uniquely, compared to competitors Industry Value Chain Customers Firm Suppliers What unique suppliers are you working with? What unique relationship are you creating? What unique internal activities make you distinctive? What unique relationship are you creating? What unique customers are you working with? Company Value Chain Support Activities Primary Activities Research and Development Human Resource Management Finance, MIS, Legal Procurement Inputs Operations Distribution Marketing & Sales Service Identifying Activities and the Value they Add Operations Marketing and Sales Firm Infrastructure Outsourcing Decisions A firm may outsource all or only part of one or more primary and/or support activities. Outsourced activity Inputs Service Distribution Human Resource Management Research and Development Procurement Outsourcing Decision Tree Think of an example for an activity (i.e. IKEA’s design capabilities) and try to work it out through this decision tree Primary Activities • Inputs ➢ Activities used to receive, store, and disseminate inputs to a product (materials handling, warehousing, inventory control) • Location of distribution facilities • Warehouse layout and designs • Operations ➢ Activities necessary to transform the inputs into final products (machining, packaging, assembly) • Efficient plant operations • Incorporation of appropriate process technology • Efficient plant layout and workflow design • Distribution ➢ Associated with collecting, storing, and distributing the product to customers • Effective shipping processes to provide quick delivery and minimize damages • Shipping of goods in large lot sizes to minimize transportation costs . The slides from here on are mostly for reference purposes Primary Activities • Marketing and sales ➢ Associated with purchases of products and services by end users and the inducements used to get them to make purchases • Innovative approaches to promotion and advertising • Proper identification of customer segments and needs • Service ➢ Providing service to enhance or maintain the value of the product • Quick response to customer needs and emergencies • Quality of service personnel and ongoing training Support Activities • Procurement ➢ Activities completed to purchase inputs needed to produce a firm’s products (raw materials and supplies, machines, laboratory equipment) • Development of collaborative “ win -win” relationships with suppliers • Analysis and selection of alternate sources of inputs to minimize dependence on one supplier • Research and development ➢ Activities completed to improve a firm’s product and the processes used to manufacture it (process equipment, basic research, product design) • Positive collaborative relationships between R&D and other departments • Excellent professional qualifications of personnel Support Activities • Human resource management ➢ Activities involved in recruiting, hiring, training, developing, and compensating all personnel • Effective recruiting, development, and retention mechanisms for employees • Quality relations with trade unions • Reward and incentive programs to motivate all employees • General administration – finance, IS, legal ➢ Supports the entire value chain and not individual activities • Effective planning systems • Excellent relationships with diverse stakeholder groups • Effective information technology to integrate value -creating activities Starbucks Value Chain Primary Activities Support Activities Debt free, Strong margins, Cash Benefits for all, Community involvement, Living wage Consumer research, Brewing technology, New beverages, Music Socially responsible purchasing, Post -recyclable cup No commodity exchange, Direct to farm to buy beans Stylish café, Baristas, Hand -crafted order, New foods, Credit cards 100% company owned, Location close, License to sell coffee to stores Store presence, Social community, Innovation, Atmosphere Baristas know customers, Personalization Financial, IS, Legal Human Resources Research & Dvmt Procurement Inputs Opers Distrib Mrktg Service Value Chains in Service Industries
1. How does value chain analysis help you understand outsourcing decisions? In your opinion, how do companies typically make outsourcing decisions? How should they make them? (A reply of 200 words). 2
Topic 3a Internal Environment – Resources Internal versus External Analysis Industry analysis explains the variation in performance across industries, but does not explain the variation in firm performance within an industry Resource – Based View Firm : A bundle (not random collection) of resources Strategic Resources: All assets, capabilities, organizational processes, information, knowledge, routines etc., controlled by a firm that enable it to develop and implement value -creating strategies Competitive Advantage: Derives from a firm’s endowment of strategic resources Resources • Resources ➢ Tangible resources • Financial resources • Physical resources • Technological resources • Organizational resources ➢ Intangible resources • Human resources • Innovation resources • Reputation resources Tangible Resources • Financial Resources • Cash • Borrowing capacity • Capacity to raise equity • Organizational Resources • Formal reporting structure • Formal planning, control, and coordination systems • Physical Resources • Plants, facilities, and equipment • Location • Technological Resources • Stock of technology, such as patents, trade -marks, copyrights, and trade secrets • Production processes Intangible Resources • Human Resources • Employees’ skills and experience • Trust • Managerial skills • Organizational practices and routines • Innovation Resources • Ideas • Scientific skills • Capacity to innovate • Reputation Resources • Reputation with customers for quality, durability, and reliability • Brand name • Reputation with suppliers for fair and positive -sum relationships Ordinary or Extraordinary Extraordinary resources are better known as “core competencies”. I prefer the more common term, while the text uses the term extraordinary Capabilities • Capabilities ➢ Organizational, not individual ➢ Capacity to deploy resources • The value of resources is different from the value managers can extract from them (resource orchestration ); e.g. poor orchestration may extract little value even when resources are valuable. ➢ Skills to transfer inputs into outputs ➢ Emerge over time through complex interactions among tangible and intangible resources ➢ Based on knowledge exchange and transfer among individuals and groups Capabilities as Best Practices • Reflect excellent capabilities in a particular functional area • Executives are quick to spot best practices in other companies and implement them in their own • Very often they create the impression that this is enough to maintain their competitive advantage • Is this so? • Implementing industry best practices is important, so that companies do not fall behind and lose competitive advantage; they help them stay afloat • But best practices are not enough to generate significant competitive advantage; except possibly in the short run Dynamic Capabilities • If not best practices, then what do they need? • Dynamic capabilities – the ability to sense entrepreneurial opportunities, seize them by making investments, and reconfigure resources in the organization to adapt to changes in the external environment Sensing Seizing Reconfiguring • Sense – opportunity recognition imperative; entrepreneurial function of managers • Seize – combination of opportunity recognition and value creation imperative; overcome tension between prior resource commitments and new investments • Reconfigure – value creation imperative; requires organizational change ( e.g., main point from Assignment 1 – ethical initiatives that resolve the tension above also contribute to financial performance and competitive advantage) Core Competencies = Extraordinary resources • Core Competencies ➢ (strategic assets, strategic capabilities, critical capabilities) ➢ “crown jewels of a company”, activities that a firm performs especially well compared to rivals , and through which the firm adds unique value to its goods or services over a long period of time • Examples ➢ Apple’s new market creation model ➢ Starbucks’ skills at ethically sourcing goods ➢ Kellogg’s reputation for safe and nutritious food products ➢ Robinhood’s service of low -cost stock trades ➢ Beyond Meat’s sustainable business model Core Competencies To be a Core Competence, a Resource Must be: • Valuable ➢ Help a firm neutralize threats or exploit opportunities (ex. Amazon’s distribution capacity allows them to offer 2 -day shipping reliably) • Rare ➢ Not possessed by many others (ex. few others have a comparably reliable and large -scale distribution fulfillment capability) • Costly to imitate (by others) ➢ Ex. everyone understands the value from fast and reliable shipping, but building such a capability requires a cumulative set of investments over time • Non -substitutable ➢ No strategically equivalent substitutes (ex. attracting customers to a brick & mortar store is a strategic alternative to shipping online orders, but fulfills a different customer need) This is also called the VRIN criteria Valuable Rare Inimitable Non -substitutable Sources of Inimitability • Physical uniqueness ➢ A resource may be inimitable because it has unique location or is protected by a patent • Unique history ➢ Capabilities may be developed through unique experiences, such as building an organizational culture, brand name, or ethical reputation • Causal ambiguity ➢ This is related to the complexity of knowledge needed to perform an activity. While employees know how it works, those from outside have a hard time figuring out the causal relationships in applying a competence. • Social complexity ➢ Capabilities may be unique because they rely on unique interpersonal relationships within a team, group, or network. Building such ties may require cultivating trust, aligning skillsets, or forming friendship among employees or managers, or with other stakeholders

Writerbay.net

Most students find it hard to finish papers at some point in their studies. If it ever happens to you, don’t get desperate—we have a service for every writing emergency! Whether you’re stuck with a problem, equation, or a piece of creative writing, we will definitely come to your rescue. Fill in the order form with the details of your paper. Write your personal instructions so we can meet your expectations.


Order a Similar Paper Order a Different Paper