VALUE
THE VALUE IS THE TOTAL AMOUNT
(i.e. TOTAL REVENUE) THAT BUYERS
ARE WILLING TO PAY FOR A FIRMS
PRODUCTS.
THE DIFFERENCE BETWEEN THE TOTAL
VALUE (OR REVENUE) AND THE TOTAL
COST OF PERFORMING ALL OF THE
FIRMS ACTIVITIES PROVIDES THE
MARGIN .
THE VALUE CHAIN IS A TOOL
DEVELOPED BY DR. MICHAEL
PORTER(HARVARD BUSINESS SCHOOL)
er
om
st
Cu
SUPPORT
ACTIVITIES
l
Va
gi
ue
ar
M
Technology Development
Va
r
Service and
Support
to
me
Sales &
Marketing
ar
gin
Outbound
Logistics
Ops.
Cu
s
Inbound
Logistics
lue
Procurement
PRIMARY ACTIVITIES
Support Activities:
Those that merely support
the primary activities
Human resources
(general and
admin.)
Tech. development
Procurement
MARGIN
The term Margin implies that
organizations realize a profit margin
that depends on their ability to
manage the linkages between all
activities in the value chain. In other
words, the organization is able to
deliver a product / service for which
the customer is willing to pay more
than the sum of the costs of all
activities in the value chain
PRIMARY ACTIVITIES
er
gi
ue
ar
M
Technology Development
l
Va
SUPPORT
ACTIVITIES
om
st
Cu
Va
r
Service and
Support
to
me
Sales &
Marketing
ar
gin
Outbound
Logistics
Operation
s
Cu
s
Inbound
Logistics
lue
Procurement
PRIMARY ACTIVITIES
PRIMARY ACTIVITIES
1.INBOUND LOGISTICS
- CONCERNED WITH RECEIVING, STORING, DISTRIBUTING
INPUTS (e.g. HANDLING OF RAW MATERIALS,
WAREHOUSING, INVENTORY CONTROL)
2. OPERATIONS
- COMPRISE THE TRANSFORMATION OF THE INPUTS INTO
THE FINAL PRODUCT FORM (E.G. PRODUCTION, ASSEMBLY,
AND PACKAGING)
3. OUTBOUND LOGISTICS
-INVOLVE THE COLLECTING, STORING, AND DISTRI
BUTING THE PRODUCT TO THE BUYERS (e.g. PROCESSING
OF ORDERS, WAREHOUSING OF FINISHED GOODS, AND
DELIVERY)
PRIMARY ACTIVITIES
4. MARKETING AND SALES
-Identification of customer needs and generation of sales.
(e.g. ADVERTISING, PROMOTION, DISTRIBUTION)
5. SERVICE
-INVOLVES HOW TO MAINTAIN THE VALUE OF THE
PRODUCT
AFTER IT IS PURCHASED.(e.g. INSTALLATION, REPAIR,
MAINTENANCE, AND TRAINING)
SUPPORT ACTIVITIES
er
om
st
Cu
SUPPORT
ACTIVITIES
l
Va
gi
ue
ar
M
Technology Development
Va
r
Service and
Support
to
me
Sales &
Marketing
ar
gin
Outbound
Logistics
Ops.
Cu
s
Inbound
Logistics
lue
Procurement
PRIMARY ACTIVITIES
SUPPORT ACTIVITIES
1.FIRM INFRASTRUCTURE
The activities such as Organization structure, control
system, company culture are categorized under firm
infrastructure.
2.HUMAN RESOURCE MANAGEMENT
Involved in recruiting, hiring, training, development and
compensation.
3.TECHNOLOGY DEVELOPMENT
These activities are intended to improve the product and
the process, can occur in many parts of the firm.
4.PROCUREMENT
Concerned with the tasks of purchasing inputs such as raw
materials, equipment, and even labor.
TATA MOTORS
(A Manufacturing Based Company)
Marketing Research
Firms, Vehicle
Financing
SAP , VCM
Inbou
nd
Logist
ics
Operatio
ns
Outbou
nd
Marketing Servi
ce
Logisti
cs
SAP , CRM - DMS
Suppliers , Contractors
Regional Warehouses,
Dealer Workshops,
Distributors, TASS
Strategic Alliances
PRIMARY ACTIVITIES
Inbound Logistics
Long term contract with service providers
transporters and agents.
Personnel at regional offices for over seeing the
smooth transit of goods.
Transparency and monitoring through deployment
of IT all transactions through SAP.
DTL (daily transport logistics) supplies for critical
high value items.
Efficient storage facilities easy storage and
retrieval.
Operations
Capital Equipment Manufacturing division tooling
development capabilities of global standard.
Apprentice Trainee Course ensuring stable source of skilled
manpower.
Kaizen & TPM(total productive management) team
continuous drive to improve efficiencies.
Automated manufacturing processes.
Distributed manufacturing Assembly units at South Africa,
Thailand, Bangladesh, Brazil etc.
Maintenance technical competence.
Capacity Utilization Mercedes Benz cars make use of Tata
Motors paint shop facilities.
Outbound Logistics
Service
Easy availability of spare parts.
Efficient collection of data from field and
communication to the respective plants.
Pan India presence, as well as global presence.
Large network of workshops Dealer workshops
and TASS.
Training facilities for dealer end and TASS
personnel.
SUPPORT ACTIVITIES
Procurement
E procurement initiative.
Global Sourcing Team China , a key destination for
sourcing essential items like tires, power steering
units etc., Steel procured from Belarus
Long term relationships with a stable and loyal pool
of suppliers.
Technology driven procurement SAP and VCM.
Strategic subsidiaries & JVs TACO group of
companies , Tata Cummins
Centralized Strategic Sourcing for key components
FIPs, Steel etc.
Group resources Tata Steel and Tata International .
Localized supplier base at mfg. locations low
Technology Development
Approximately 2% of the annual profits of the
company invested in research and development.
Knowledge portal helps employees keep abreast
with the latest technologies.
Extensive prototype building and testing facilities.
Strategic partnerships MDI (France), Fiat etc.
Formal benchmarking process.
Technology Day organized across all plant
locations.
Human Resource
Vast pool of technically competent engineers and
managers.
Focus on development of technical capabilities
Technical Training Centers, Alliance with technical
Institutes
Focus on development of managerial capabilities
MTCs , TMTC, executive training programs at premier
business schools
Career advancement schemes ESS, FTSS
Firm Infrastructure
Multi Location facilities
Strong leadership under the aegis of Tata Sons
Best in class prototype building facilities
Technology SAP
Large product portfolio
WALLMART
(A Service Based Company)