Critical Evaluation of Value Chain Analysis for Assessing Competitive Advantage-A Study on Select Companies of E-Tailing Industry

By Razak, Abdul; Vattikoti, Kishore | Academy of Strategic Management Journal, December 2018 | Go to article overview

Critical Evaluation of Value Chain Analysis for Assessing Competitive Advantage-A Study on Select Companies of E-Tailing Industry


Razak, Abdul, Vattikoti, Kishore, Academy of Strategic Management Journal


INTRODUCTION

Competitive advantage for an organization means not just matching or exceeding what competitors can do, but ascertaining what customers want or expecting from an organization and then satisfying customers profitably, and even sometimes exceeding their level of expectations (Dambudzo, 2013). Due to globalization, the barriers of inter-regional and international trade have lessened and access to products has become very easier. Consumers can trace and get the best product as per their requirements, at an affordable price, whenever and wherever let it be in the globe. The rise in customers' expectations and increasing competition among competitors makes a company restless and try to achieve core competence (Bryson, 2018).

A Value Chain analysis is a Strategic management tool which is used to measure the significance of the customer's perceived value. By making the organizations to determine the strategic advantages and disadvantages of their accomplishments and value-creating processes in the marketplace, VCA (Value Chain Analysis) becomes an essential element for assessing organization's competitive advantage. This is mainly addressed to managers, management accountants and top-level management who are part of decision making who takes an effort in implementing value chain analysis in their respective organizations (Antoniou et al., 2011). The concepts, tools and techniques presented here apply to all organizations that manufactures and sell goods and services.

Today, Organizations face huge competition in the global market place. In order to sustain and improve competitive advantage, organizations have to determine to what extent they are capable in meeting or exceeding the dynamic expectations of the consumers. As an important tool of strategic planning, value chain analysis looks at value creation across the complete range of activities and processes that shape the ultimate offering to the consumers and offers important vision to the organization's long-term growth and existence (Chen, 2009). The present study defines concepts and techniques of value chain analysis; describes the main requisites and elements of the value chain approach: internal cost leadership analysis, internal differentiation analysis and vertical linkage analysis; plans three useful strategic outlines i.e., industry structure, core competencies and segmentation; and discusses the trends, issues and challenges that are involved in value chain analysis. The concepts and techniques presented can be practical and applied in all types of organizations.

Significance of the Study

Most of the successful and creative organizations have a corporate level strategy with corporate scorecard to lead the big picture. Each business unit within the firm then has a Business level strategy, where the leaders use to control how the firm will compete in the individual markets and establish competitive advantage. In turn, each team should have own strategy to ensure that the day-to-day activities help the organization to move in the right direction. At each level determining how the firm is going to win in the period ahead. Large enterprises have always been a strategic component of developing economies (Porter, 2008). The study is undertaken to explore how enterprises have adopted value chain analysis in assessing Competitive advantage in different levels of strategy.

REVIEW LITERATURE

Overview of Literature

The value chain activities include research and development, design, production, marketing, distribution and lastly after-sale service. These support activities are set of supplementary activities that includes accounting, finance, human resources and information technology (Schmitz, 2005) and Each and every activities in the value chain added value from the perspective of the customer (Horngren et al., 2012).

Value chain analysis is a strategic tool that helps in building a structural strategy of an organization; (Coulter & Robbins, 2009). …

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