COMM 401 Lecture Notes - Lecture 4: Value Chain, Profit Margin, Quality Assurance
7 Dec 2018
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Profit margin = value created and captured cost of creating that value. Value chain activities determine costs and affect profits = need to understand sources of value: primary activities: Infrastructure: value driver = support systems/function that allow to maintain daily operations, including accounting, legal, admin, and general mgmt. Identify sub-activities for each primary activity: direct activities: create value by themselves, i. e. advertising for m&s. Indirect activities: allow direct activities to run smoothly, i. e. keeping customer records: quality assurance: ensure that direct + indirect activities meet necessary standards, i. e. editing advertisements/proofreading. Identify sub-activities for each support activity: hrm, tech development and procurement: within each primary activity. Infrastructure: cross-functional in nature (vs. specific to each primary activity). Identify links between all the value activities: look for opportunities to increase value. Complete analysis of competitive advantage requires analysis of a firm"s internal strengths and weaknesses, which are then integrated with environmental analysis.
