Question

Value Chain and Competitive Advantage

In Chapter 4, you learned that internal environmental analysis can be accomplished using a tool known as the value chain (see pages 131-135). After studying this section, please use the value chain components presented in Exhibit 4-2 to create a table describing the existence or lack thereof of these value chain components in your organization. You may not know about each and every component listed, but try to include a bullet for those you do know about. In addition, when searching for competitive advantage, which characteristic of a strength or weakness (value, rareness, imitability, sustainability) is the most important in health care organizations? Discuss your response.

Answer 1

The value chain is used as the basic tool used for analyzing the sources of competitive advantage. The value chain disaggregates a firm into its strategically relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation. A systematic way of examining all the activities a firm performs and how they interact is necessary for analyzing the sources of competitive advantage. The components of the value chain are :

*Inbound logistics

(primary) receiving, storing, and disseminating inputs to the products

*Operations/manufacturing

(primary) transforming inputs into the final products

*Outbound logistics

(primary) collecting, storing, and physically distributing the products to buyers.

*Sales and marketing

(primary) inducing buyers to purchase the products and providing a means for them to do so

*Customer service

(primary) assisting customers' use of the products and thus maintaining and enhancing the products' value

*Procurement

(support) consists of the processes of finding vendors, setting up contractual arrangements, and negotiating prices

*Technology

(support) research and development, developing new techniques, methods, and procedures

*Human resources

(support) recruiting, compensation, evaluation, and training of employees

*Infrastructure

(support) general management, finance, accounting, legal, and government affairs

Inbound logistics	result in getting the difficulty of low-cost suppliers for raw materials.
Operations/Manufacturing	The lack of operations results from the unavailability of franchisee for transforming the product to make it final
Outbound logistics	Lack of distribution and delivery
Sales and marketing	failure in media and print advertising, including social media posts, magazine advertisements, billboards etc
Customer Service	No support and training for the product, warranties, and guarantees.
Procurement	Lack of vendors and results in alterations in budget management
Technology	Results in the failure of business innovation
Human Resources	No competitive challenges among the employees and lacks in excellence
Infrastructure	Failure of making decisions and effectively manage resources

A competitive advantage refers to the benefits that a firm or an organization has over the other firms or organizations involved in the same business. This enables the organization to retain more clients as compared to the other organizations. There are many competitive advantages which may include the organization's cost structure, branding of the product offered, improved distribution system and client support. When considering a competitive advantage, the value of the advantage should be considered as this is more likely to attract the clients and maintain them within the organization. The competitive advantage considered should ensure that it sustains the organization’s objective and it should not be easily neutralized by the competing organizations.

The value of the competitive advantage is one of the most important characteristics considered when selecting the most effective advantage. To improve on the value of the competitive advantage, value proposition, value uniqueness and cost should be considered. Value proposition ensures that the competitive advantage focuses on providing solutions to the main problems that are faced by the clients and also improve the general performance of the organization in terms of services provided

Thus when considering the competitive advantage we have to give main importance to the values.