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Table of Contents
Chapter 3 ......................................................................................................................................... 2
Interrelationship and expanded relationship to other stakeholders in the business ........................ 3
Prosumer’s Concept ........................................................................................................................ 4
Resource Based View ..................................................................................................................... 4
Tangible resources....................................................................................................................... 4
Intangible resources..................................................................................................................... 5
Organizational Capability ............................................................................................................... 5
Sustainable Competitive Advantage ............................................................................................... 5
Organization’s profit and its relationship to people’s profit ........................................................... 6
Evaluating Performance of Firm ..................................................................................................... 6
Running Head: Weekly Report 3 2
Chapter 3
In this chapter, I will review the concept of value chain analysis, which is described as an
analysis of the activities of the organization internally. The purpose of this tool if finding which
activities are valued generator, and which should be improved for building competitive
advantage. Most of the time, we have only one specific activity in the organization that creates a
It can be asked by having a SWOT analysis on why we need to use this tool. Therefore, it
should be mention that SWOT analysis can be considered as a starting tool for our analysis
because it has several limitations. First, this tool will focus on one-time analysis, and it will not
evaluate the situation in the period of time. This tool also can not help us to recognize the
strengths which can create a competitive advantage over time, and in a sustainable way. So, for
In every business, we have two types of activities: (1) primary (Figure 1), and (2)
support. Inbound logistic contains the process of how to receive, store, and distribute the
products that come into our business, which contain the process such as designing the layout in
business to increase operation’s efficiency. Operations are containing the whole process of
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building a product from its raw materials. Regarding outbound logistics, we have the similar
process of logistics but in an outside way to the customer line. Marketing and sales cover all the
activities to introduce the products to end users through sales channels by considering the price
element, promotion strategy, and advertising strategies. Service is covered tasks such as
installation process, repairing, training, and adjustment of the product, which add or sustain
For support activities, procurement refers to the process of purchasing those goods that
are necessary and vital for the business’s performance. General administration helps us to plan
and support the whole system to reach to the defined objectives and goals. In human resource
management, we manage our all factors that affect our human assets such as compensation
program, training, and recruitment events. In technology development covers all the strategies
and techniques, and tasks that help us to use a new concept, ideas, and technology in our
business’s operation.
There are two kinds of relationship in the value chain. First can be defined as a
relationship between those mentioned activities, and the second relationship is between those
activities and other parties such as customers, suppliers, and vendors. In this regard, some
research suggested that the coordination and optimization of this relationship can be created
competitive advantages.
In my opinion, the IT can enhance this relationship, and from my perspective, IT has
changed its traditional role as support activity in primary activity. For example, Lufthansa
airlines with the help of its IT infrastructure and powerful website helped its sale and marketing
activity to have a competitive advantage among that airline who use code sharing flight.
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Prosumer’s Concept
This concept was one of the IBM studies, and it means that our customers are our
producers too. In other words, this world wants to show the vital role of customers in our
production. Nowadays, more and more companies use from customization in the value chain. In
this way, we can realize why Procter & Gamble define a new mission, and it was ‘consumer is
our boss.’ By defining this mission, this company integrates consumers by having co-design and
co-engineering products.
This tool can help us to understand and interpret the organization’s resources, which can
lead to recognizing the strategic resources that are the creator of the competitive advantage for
the business. there two kinds of resources: (1) tangible and (2) intangible which will be explained
Tangible resources
Finance: it contains all the elements that affect the financial situation of the
company such as a cash account, cash equivalent, and capacity of the company to borrow money.
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Physical: Those elements such as place, equipment and stuff that physically
Technological: it covers the trade secret, the copyright, patents, and trademark.
Organizational: it contains the evaluation process, and the control system and the
Intangible resources
Human assets: real assets of our organization are our human, and for managing
them, we should learn to manage them effectively. In my opinion, this can be found in the green
human resource approach that considered as a value in the eye of the customers.
Innovation and creativity: this activity help us to make our business more durable,
and it contains the innovation capability that helps us to think and work.
Reputation: those elements that build the brand image and name of the company
that has value for customers and suppliers. For example, Harley-Davidson company has created
its powerful image in mind of even ordinary people even if they are not a motor rider.
Organizational Capability
This concept refers to those skills and competencies that the company has in output
transformation. In fact, we measure the capacity we have in our organization to manage the
Resources should have some characteristics of being strategic. It should be valuable, rare,
being difficult to imitate, and being difficult to substitute. For being inimitability, we use from
path dependency; it means that it is hard to supply these materials by potential competitors. Also,
in this regard, we can also use causal ambiguity and social complexity.
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In every business, employees and managers help the business to obtain profit, in this way
they expect to have a suitable amount of this money in the form of bonus, rewards, and
compensation. There four elements that affect this profit, and there are:
Bargaining power
Replacement cost
Exits cost
We consider Professor Vincenti has an offer from another university. So, the UCW has a
big problem as big boss has a critical role in both educational and managerial part of the
organization, and he values generator for us. Also, he is a professional Italian; this means that he
has a high power of negotiation and power because of his excellent reputation. For UCW, it is hard
to find a substitute for him, and we should he could also consider a threat for us if he accepts
For evaluation of the performance of the organization, we use two approaches of financial
ratio and Balanced Scorecard Analysis. in the first approach, we use from market value, solvency
(long term-short term) and profitably ratios in the organization. In this way, we use and compare
the information for benchmarking of key competitors and industry norms over time. In the second
approach, we integrate the stakeholder perspective with financial analysis. In the balanced
scorecard, we should think that how customers see and evaluate us. From our perspective, we
should figure it out how we want to excel. Also, another question can be this: does our business
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create and build value continuously, and how the company looks in term of financial approach to
shareholders. It can also help managers to consider the business from the customer’s perspectives,
internal business, innovation and learning, and financial perspectives. The benefits of the balanced
Better alignment with a process such as risk management, budgeting with strategies
priorities.