Value chain analysis and organizational strategy

Value Chain Analysis

Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers' range of products has to be convenient to customers. Activities that an organization engages in should add value to the service and products that an organization produces. This can only be achieved if the activities are run at optimum level (Mind Tools, 2013). For an organization to gain real competitive advantage the value obtained should exceed the costs of running them. Some of the primary activities involved here include inbound logistics, operations, outbound logistics, marketing, and sales. Inbound logistics are goods obtained from an organization's suppliers to be used for producing end products. Raw materials and goods are manufactured into final products (Mind Tools, 2013). Value is added to a product as it moves through the production line. Products that have been produced are distributed to distribution centers, wholesalers, retailers, or customers. Distribution of finished goods is referred to as outbound logistics. Marketing bit ensures that a product is targeted towards the correct customer group (Mind Tools, 2013). After a product has been sold an organization can offer support services like after sales training, guarantees, and warranties to its customers. Support activities like procurement, technology development, human resource management, and firm infrastructure helps an organization to develop competitive advantage.

Balanced scorecard is a strategic planning and management system used by businesses and not for profit organizations to align their business activities to their vision and strategy. It helps in improving internal and external communications as well as enhancing their capability to monitor organization performance against strategic goals. Balanced scorecard is a performance measurement framework that adds strategic non-financial measures to traditional financial metrics (Voelpel, Leibold, Eckhoff & Davenport, 2006). The balanced scorecard concept is based on the premise that measurement motivates. Staffs are motivated to actualize an organization's vision. The concept goes beyond performance measurement and encompasses the efforts of people, throughout an organization, towards achieving strategic objectives. The balanced scorecard gives feedback on current performance and targets future performance. The concept converts an organization's vision and strategy into comprehensive set of performance and action measures that provides the basis for a strategic measurement and management system (Voelpel et al., 2006). Measures are used in financial performance, customers, internal business processes, and learning and growth. This helps in aligning individual, departmental, and organizational goals and identifying new processes for meeting customer and shareholder objectives. The scorecard is used to test, gain feedback, and update an organization's goals in order to identify new product development (Voelpel et al., 2006).