Value Chain Analysis Essay

Questions:

1. Value chain analysis looks good on paper but is difficult to apply and has little practical value. Do you agree?
2. According to Hopkins (2010), there are two ways to implement VCA in an organization. One is labelled Win-win strategy and the second one is labelled Zero-sum strategy.
what is your opinion on Win-win versus Zero-sum method? Which approach in your opinion is better and why?

Answers:

1. Value Chain analysis is a strategic tool that is used to analyze the internal activities of a firm so the most valuable activities can be found. On the other hand, value chain analysis is used to find out the activities that need to be improved. Hence, it can be said that, value chain analysis has a significant role to play in the performance of an organization (McLaney and Atrill 2014). However, there is a wide misconception that value chain analysis is a difficult process and there is little practical value of value chain analysis. The scenario is very different from the above comment. Businesses irrespective of size and nature need to employ value chain analysis to increase the value of the organization to the customers. As discussed above, value chain analysis is a strategic tool that helps to make strategies for the business. Another very important role of value chain analysis is that it gives the organizations the necessary competitive advantage by creating cost differentiation strategies. Value chain analysis can be employees to businesses from any industry like the manufacturing industry, the retail industry or the sales industry. The employment of value chain analysis helps in delivering values to the customers of the organization as per commitment. Hence, the above discussion states that value chain analysis is an important tool in a business organization as it helps to create value to the business. In addition, there is no difficulty for businesses to apply value chain analysis. Thus, it can be concluded that the statement in the question is not correct (Cuganesan, Dunford and Palmer 2012).

2. As discussed above, value chain analysis is an important tool to add value in the various operations of the business organizations. There are two ways to implement value chain in a business organization. They are win-win strat5egy and zero-sum strategy. Both the strategies help the organizations to implement value chain in the business activities. In the win-win strategy, the value chain of the organization is set in such a way that both the producer and the customers are benefitted in an equal way. This process is an effective way to add value to the activities of the organizations (Rothaermel 2015). On the other hand, zero-sum method is also a useful strategy to implement value chain in an organization. The major aim of this method is to find out the strong as well as weak activities of the business firm and to take corrective steps in order to add value to those weak activities (Garcia?Castro and Aguilera 2015). From the discussion about these two methods, it can be said that both these methods are important for the organizations. However, win-win strategy is better than zero-sum strategy. The reason is that in win-win strategy, both the organization and the customers of the organization can be benefitted. However, the zero-sum method emphasizes more to strengthen the weak activities of the organizations. The win-win strategy helps the organization to add value to the customers by strengthen the activities of the business. Hence, win-win method is better than zero-sum method.

References

Cuganesan, S., Dunford, R. and Palmer, I., 2012. Strategic management accounting and strategy practices within a public sector agency. Management Accounting Research, 23(4), pp.245-260.

Garcia?Castro, R. and Aguilera, R.V., 2015. Incremental value creation and appropriation in a world with multiple stakeholders. Strategic Management Journal, 36(1), pp.137-147.

McLaney, E.J. and Atrill, P., 2014. Accounting and Finance: An Introduction. Pearson.

Rothaermel, F.T., 2015. Strategic management. New York, NY: McGraw-Hill.

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