1.

0 Introduction

Management thinking is designed to help managers, business student, and reseserhers

to perform better by providing access to the latest thinking on management theory and
practice. It is structured around a number of interest areas which reflect the most talked about
Management thinking did start to consider the human element of organisations from the
second half of the twentieth century.

System thinking is an essential component of learning organization. It is the process

of understanding how thing influence one together one another within a whole. It was very
impotant since the world of business today is complex and growing more complex everyday.
System thinking is a method of critical thinking by which we analyse the relationships
between the systems parts in order to understand a situation for better decision-making.

2.0 Background
2.1 Biography

Michael E. Porter is a leading authority on competitive strategy, the competitiveness

and economic development of nations, states, and regions, and the application of competitive
principles to social problems such as health care, the environment, and corporate
responsibility.

Professor Porter is generally recognized as the father of the modern strategy field, as
has been identified in a variety of rankings and surveys as the worlds most influential thinker
on management and competitiveness.

He is the Bishop William Lawrence University Professor, based at Harvard Business

School. A University professorship is the highest professional recognition that can be awarded
to a Harvard faculty member. In 2001, Harvard Business School and Harvard University
jointly created the Institute for Strategy and Competitiveness, dedicated to furthering
Professor Porters work.

He is the author of 17 books and over 125 articles. He received a B.S.E. with high
honors in aerospace and mechanical engineering from Princeton University in 1969, where he
was elected to Phi Beta Kappa and Tau Beta Pi. He received an M.B.A. with high distinction
in 1971 from the Harvard Business School, where he was a George F. Baker Scholar, and a
Ph.D. in Business Economics from Harvard University in 1973.

2.2 Teaching

Professor Porter's ideas are the foundation for courses on strategy and competitiveness,
and his work is taught at virtually every business school in the world. At Harvard, Professor
Porters course, Microeconomics of Competitiveness, is a graduate course open to students
from across the university. It is also taught in partnership with more than 80 other universities
from every continent using curriculum, video content and instructor support developed at
Harvard.

Professor Porter developed and chairs the New CEO Workshop, a Harvard Business
School program for newly appointed CEOs of the worlds largest and more complex
corporations. Held twice each year by invitation only, the workshop focuses on the challenges
facing new CEOs in assuming leadership. His Harvard Business Review article with Jay
Lorsch and Nitin Nohria, Seven Surprises for New CEOs (October 2004), describes some of
the learning from this ongoing body of work. Professor Porter speaks widely on strategy,
competitiveness, health care delivery, related subjects to business, government, non-profit,
and philanthropic leaders.

2.3 Research
2.3.1 Strategy

Professor Porters core field is competitive strategy, which remains a major focus of
his research. His book, Competitive Strategy: Techniques for Analyzing Industries and
Competitors, is in its 63rd printing and has been translated into 19 languages. His second
major strategy book, Competitive Advantage: Creating and Sustaining Superior Performance,
was published in 1985 and is in its 38th printing. His book On Competition (2008) contains
his most influential articles on strategy and competition, including the award-winning
Harvard Business Review article 'What is Strategy?' (1996) and 'The Five Competitive Forces
That Shape Strategy' (2008), a revised and extended version of his classic article on industry
analysis. Professor Porters next major book on strategy is in process.
2.3.2 Competitiveness of Nations and Regions

Professor Porter's 1990 book, The Competitive Advantage of Nations, presents a new
theory of how nations and regions compete and their sources of economic prosperity.
Motivated by his appointment by President Ronald Reagan to the President's Commission on
Industrial Competitiveness, the book has guided economic policy in countless nations and
regions. Subsequent articles have expanded on the concept of clusters (geographic
concentrations of related industries that occur in particular fields) and other aspects of the
theory.

National Competitiveness. Professor Porter has published books about national

competitiveness covering New Zealand, Canada, Sweden, and Switzerland. His book Can
Japan Compete? (2000) challenged long-held views about the Japanese economic miracle.

Professor Porter chairs the Global Competitiveness Report, an annual ranking of the
competitiveness and growth prospects of more than 120 countries published by the World
Economic Forum.

Clusters. Professor Porters ideas on clusters, first introduced in 1990, have given rise
to a large body of theory and practice throughout the world. Cluster-based economic
development thinking has resulted in many hundreds of public-private cluster initiatives in
virtually every country. The article Clusters and Competition: New Agendas for Companies,
Governments, and Institutions and On Competition (1998) provide a summary.

Regional Competitiveness. Professor Porter extended his work on competitiveness to

states, provinces, and other sub-national regions. He led the Clusters of Innovation project
which developed a framework for economic policy in U.S. regions. He also created the
Cluster Mapping Project at Harvard, which provides rich data on the economic geography of
U.S. regions and clusters on a special web site. Professor Porters methodology is the basis for
comprehensive new data on the economic geography of the 27 countries of the European
Union. The article The Economic Performance of Regions (2003) summarizes some of the
important findings from this data, and a new paper, Convergence, Clusters and Economic
Performance (2006), with Mercedes Delgado and Scott Stern, presents the first
comprehensive statistical examination of U.S. regional performance using cluster data.

Innovation. Professor Porter is co-author (with Professor Scott Stern and others) of a
body of work on the sources of innovation in national and regional economies, including The
New Challenge to America's Prosperity: Findings from the Innovation Index (1999), 'The
Determinants of National Innovative Capacity' (2000), and 'Measuring the 'Ideas' Production
Function: Evidence from International Patent Output' (2000).

2.3.3 Competition and Society

Professor Porter's third major body of work has addressed the relationship between
competition and important social issues such as poverty and the natural environment.

Economically Distressed Communities.. Professor Porter offered a new approach to

revitalizing distressed urban communities, beginning with the Harvard Business Review
article 'The Competitive Advantage of the Inner City'. In 1994, he founded The Initiative for a
Competitive Inner City (ICIC), a non-profit, private-sector organization to catalyze inner-city
business development across the country. Professor Porter is Chairman of the ICIC, a national
organization that works in cities across America. Professor Porter has also written on
economic development in rural areas.

The Natural Environment. Professor Porter introduced a controversial theory that

environmental progress and economic competitiveness were not inconsistent but
complementary, first put forth in his Scientific American essay, 'America's Green Strategy'
(1991), and developed in more detail in his article 'Toward a New Conception of the
Environment-Competitiveness Relationship' (1995). The Porter Hypothesis has been the
subject of more than 100 articles and has spawned a rich literature. The theory is now gaining
widening acceptance and is guiding corporate practice and thinking about regulation.

Philanthropy and Corporate Social Responsibility. Professor Porter has devoted

growing attention to philanthropy and the role of corporations in society. His Harvard
Business Review article with Mark Kramer, 'Philanthropy's New Agenda: Creating Value'
(1999), introduced a new framework for developing strategy in foundations and other
philanthropic organizations.

His Harvard Business Review article, 'The Competitive Advantage of Corporate

Philanthropy' (2002), focused on how corporations can create more social benefit with their
philanthropy. His Harvard Business Review article with Mark Kramer, 'Strategy and Society:
The Link Between Competitive Advantage and Corporate Social Responsibility' (2006), puts
forth an approach for companies to think strategically about corporate social responsibility.

With Mark Kramer, Professor Porter co-founded the Center for Effective
Philanthropy, a non profit organization dedicated to creating concepts and measurement tools
to improve foundation performance. He also co-founded FSG-Social Impact Advisors, an
international non-profit advisory firm that provides advice and innovative ideas about social
strategy to foundations, corporations, and social service organizations.

2.0 Contribution

Michael Porter who is the first person who introduced the term Value Chain in his
book Competitive advantage: Creating and Sustaining Superior Performance (Porter 1985).
Michael Porter describe Value Chain as a representation of a firms value-adding activities,
based on its pricing strategy and cost structure. The firms can understand their ability to
implement its own capabilities and what is important in customer need for competitive
strategy to be successful. The reason why company should conducting the value chain
analysis as first steps because to break down the key activities which involve in the frame
work.

Porters generic strategy matrix, which highlights cost leadership, differentiation and
focus as the three basic choices for firms, has dominated corporate competitive strategy for
the last 30 years. According to this model, a company can choose how it wants to compete,
based on the match between its type of competitive advantage and the market target pursued,
as the key determinants of choice.
 Porters generic strategy typology remains one of the most notable in the strategic
management literature. A business can maximize performance either by striving to be the low
cost producer in an industry or by differentiating its line of products or services from those of
other businesses; either of these two approaches can be accompanied by a focus of
organizational efforts on a given segment of the market. Any organization that fails to make a
strategic decision to opt for one of these strategies is in danger of being stuck in the middle.
The organization in failing to decide, tries both to be the cost leader and differentiator and
achieves neither, and in the process confuses consumers.

The next steps are to assess the potential for adding value through the means of cost
advantage or differentiation. Finally, it is very important to company for the analyst to
determine the strategies that focus on those activities to attain sustainable competitive
advantages. The company that can effectively it manages the various activities in value chain
will be determine their profitability; price that the customer is willing to pay for the company
products and services exceeds the relative cost of the value chain activities.

4.0 Feedback
4.1 Support

Strategic typology generic by Porters is the most important in the strategic

management literature. A business can striving to be low cost producer in an industry or by
differentiating its line of products or services fromthose of other businesses to maximize
performance; either of these two approaches can be accompanied by a focus of organizational
efforts on a given segment of the market. The organization will be faced problem being
stuck in the middle if to fails to make a strategic decision to opt for one of these strategic.
The orgnization involved into problem to decide, tries both to be the cost leader and
differentiator and achieves neither, and in the process confuses consumers.

The value chain begin from the production systems of the raw material and it will
move along the linkages with other entreprise engaged in trading, assembling, processing etc.
Porter argued that the source of the competitive advantage cannotbe detected by looking at the
firm as a whole. Rather the firm should be disaggregated in a series of activities and
competitive advantage found in one (or more) of such activities.
 Porter distinguished between primary activities which have directly contribution to
add value to production of the goods (service) and support activities, which instead have
indirect effects on the final value of the products. To attain the main objective the study
mapping the value chain and analyzing the existing performance in terms of price, cost and
profits from the source to the downstream of the value chain was done. Customer-centric
approach is a modern value chain approach in which the customers are the first link to all that
follow (Slywotzky & Morrison 1999).

C. Haksever (2004) stated that value creation has an important aspect of business firm,
but they dont know For whom the value is created because some author said it must create
only for its shareholder, another said stakeholder. Value can be created from different
activities, policies and practices of the firms. D. Walter. and G. Lancaster (2000) said that the
supply chain and logistics management are the main function which is a supporting activities,
in overall value chain. Supply chain management is interface the relationship between the
stakeholder and a enterprise function that occurred in the maximization of value creation.

Gattorna and Walters (1996) stated that The value chain provides a systematic way of
examining the activities of not only the company but also the activities of component
companies within an overall pipeline or supply chain. Katie D (2014) found that
optimization of value chain approach as a way to reallocate, redistributes risk and provides
necessary services.