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Value Chain and Strategic Activity Systems: Five Guys

A firm$$s value chain describes its internal activities when transforming inputs into outputs. Each action the firm performs along the horizontal chain adds incremental value as raw materials and other inputs are transformed into components that are assembled into finished products or services for the end consumer. Each activity the firm performs along the horizontal value chain also adds incremental costs. A careful analysis of the value chain allows strategic leaders to obtain a more detailed and fine$-$grained understanding of how the firm$$s economic value creation $($V $$ C$)$ breaks down into distinct activities that help determine the perceived value $($V$)$ and the costs $($C$)$ to create it$.$

A company$$s competitive advantage can result from its unique network of activities. However, a static fit with the current environment is insufficient; instead, a firm$$s unique network of activities must evolve to take advantage of new opportunities and mitigate emerging threats. Strategic leaders can identify critical activities by benchmarking the competition and using activity$-$based accounting, which identifies specific activities along the company$$s Value Chain and then assigns costs to each activity based on estimates of all resources consumed.

This exercise is important because as a manager you need to understand your company$$s value chain and the activities that add value to the finished product or service for the end consumer. That value creation comes at an economic cost to the company.

The goal of this exercise is to demonstrate your understanding of the Value Chain and how each activity adds value to a finished product and the corresponding costs associated with that added value. And to identify, within this network of distinct activities, how to create a competitive advantage.

Conduct a value Chain analysis for Five Guys

Five Guys is an American fast food restaurant chain. They offer a simple menu that focuses on quality burgers, hot dogs, French fries, and a great customer experience. As a result, they can command a premium price for their products and services.

After reading the relevant content in Chapter $4,$ answer the questions that follow.

What are Five Guys$$ support activities?

Multiple Choice

Accounting and Finance

Human Resources

Research and Development

Information Systems

No support activities are noted