The value chain is best understood to be the prospective sources of a company’s economic advantage within its own industry. The value chain separates the firm into its major activities so that the behaviour of costs, the associated value added and the probable sources of differentiation could be understood. It depends on comprehending how a firm’s value chain relates to, and interacts with the value chain of suppliers, competitors and customers.
The main aim of a value chain analysis is to identify opportunities to obtain cost advantages which the firms gain by controlling the key cost drivers, finding ways to rearrange the value chain and optimising the linkages between activities. Another major purpose of the value chain is to increase differentiation. This is achieved by comprehending and selectively integrating the firm’s linkages with their customers’ value chains thereby enhancing their customers’ competitive advantage.
The Coca- Cola Company one such company......
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