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Chapter 3: Assessing the internal environment of the firm. After reading this chapter, you should have a good understanding of the following learning objectives: The benefits and limitations of SWOT analysis in conducting an internal analysis of the firm, the primary and support activities of a firm's value chain, how value-chain analysis can help managers create value by investigating relationships among activities within the firm and between the firm and its customers and suppliers,. | Assessing the Internal Environment of the Firm chapter 3 Value-Chain Analysis Value-chain analysis looks at the sequential process of value-creating activities Value is the amount buyers are willing to pay for what a firm provides How is value created within the organization? How is value created for other organizations in the overall supply chain or distribution channel? The value received must exceed the costs of production 3- Value-chain analysis = a strategic analysis of an organization that uses value-creating activities. Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price a firm’s product commands, and the quantity it can sell. A firm is profitable when the value it receives exceeds the total costs involved in creating its product or service. Creating value for buyers that exceeds the costs of production (i.e. margin) is a key concept used in analyzing a firm’s competitive position. | Assessing the Internal Environment of the Firm chapter 3 Value-Chain Analysis Value-chain analysis looks at the sequential process of value-creating activities Value is the amount buyers are willing to pay for what a firm provides How is value created within the organization? How is value created for other organizations in the overall supply chain or distribution channel? The value received must exceed the costs of production 3- Value-chain analysis = a strategic analysis of an organization that uses value-creating activities. Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price a firm’s product commands, and the quantity it can sell. A firm is profitable when the value it receives exceeds the total costs involved in creating its product or service. Creating value for buyers that exceeds the costs of production (i.e. margin) is a key concept used in analyzing a firm’s competitive position. Value-Chain Analysis Primary activities contribute to the physical creation of the product or service; the sale & transfer to the buyer; and service after the sale: Inbound logistics Operations Outbound logistics Marketing & sales Service 3- Primary activities = sequential activities of the value chain that refer to the physical creation of the product or service, its sale and transfer to the buyer, and its service after sale, including inbound logistics, operations, outbound logistics, marketing and sales, and service. Value-Chain Analysis Support activities either add value by themselves or add value through important relationships with both primary activities & other support activities: Procurement Technology development Human resource management General administration 3- Support activities = activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities; including .
