Value Chains

Over the last several weeks, you learned about competitive strategies. Michael Porter suggests that marketing managers should pay close attention to value chains a network of value-creating activities. There are five primary value-creating activities and four support activities.

The primary activities include inbound logistics, operations/manufacturing, outbound logistics, sales and marketing, and customer service. Consider a fictional example of Mikes Bikes, an online bicycle organization in Anytown, USA. Inbound logistics involve receiving, storing, and disseminating inputs to products. Mikes Bikes acquire bicycle parts from several manufacturers. The second primary activity in the value chain is operations and manufacturing, transforming inputs into final products. For this step, Mikes Bikes assemble the parts from the manufacturer to produce a bike. Activity three in the value chain is outbound logistics, which includes collecting, storing, and physically distributing products to the buyers. In this phase, Mikes Bikes ship the bicycles to their customers. The fourth primary activity includes sales and marketing, inducing buyers to purchase products and providing a means for them to purchase. Mikes Bikes frequently uses digital marketing and social media to accomplish this task. The final primary activity is customer service, which assists customers in using the products. Mikes Bikes provide 24/7 customer support.

The four supporting activities in the value chain include procurement, technology, human resources, and infrastructure. For procurement, Mikes Bikes should manage supplier relationships. For technology, investigate new designs for bikes. Human resources need to hire and support employees. Lastly, Mikes Bikes should manage company resources for infrastructure (Kroenke & McKinney, 2013).

According to Tim Sobierski at Harvard Business School (2020), there are three major steps involved with value chain analysis: (1) Identify all the steps or activities in the process of creating a product or deliver a service; (2) determine how what is produced or created by the company creates value for the customer in terms of quality, utility, what they need and want, and is it financially possible and profitable; and (3) analyze the steps in the companys value chain to determine whether each step is the most efficient for achieving company goals in a competitive market.

Respond to the following:

• Provide an example of a value chain similar to Mikes Bikes.
• Identify three value chain goals for your example.