The Role of Value Chain Model Essay - 1817 Words

2 From value chains to value networks and inter firm relationship 2.1 The evolution of the concepts of value chain Porter ´s value chain model shaped our way of understanding and analyzing industries for the past 30 years. It explores the links between the activities to be undertaken in order to commercialize a product in the market and how these activities add value to the final delivery (Peppard and Rylander, 2006). It focus on the value creation processes within the firms, not on the inter firms links in the value chain (Kothandaraman and Wilson, 2001) and how the different links influence the competitiveness of the industries (Peppard and Rylander, 2006). Therefore, this model assumes that the value is created within one single main†¦show more content†¦Therefore, the suppliers in this type of value chain can be replaced at any time, as they do not have strong bonds with the buying firm and provided that another company could perform the same task for a lower price. In this scenario, competition is examined between firms and their outcomes of the productive process and enhance competitiveness has to do with finding the flaws in the value chain in comparison to the competitor and try to fix them, also by changing suppliers. As Peppard and Rylander (2006) state: Strategy becomes primarily from the art of positioning the firm in the right place in the value chain. What matters in this model is the role of each firm individually and the relation between firms is not meant to be long lasting nor considered to be a source of competitive advantage. This relationships are meant to last only until the point where they are beneficial to the main firm, financially wise. With the increasing complexity of markets and products the model developed by Porter is not enough to address the adequate questions and provide tools for facing the challenges of the insertion of firms and value adding process in a growing competition. Also, with the increased importance of the services industries - which includes very complex deliveries as telecommunications, banking, insurance, music, entertainmentShow MoreRelatedDells Value Chain1517 Words   |  7 PagesThe value chain was a concept initially proposed by McKinsey and later developed and made public by Harvard strategy guru Michael Porter. According to Porter, the value chain is defined as the complete flow of products from the suppliers to the customers and management of the information flow in a way that maximizes the consumer satisfaction with the increase in the profit margins of the company. 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