Table of Contents
2. Value Chain- What is it?
3. Merits and demerits of Value chain analysis
4. Value Chain Analysis of Apple Inc.
a. Primary Activities
b. Support Activities
Value chain analysis goes a long way in the categorization of the value adding activities in an organization. This aspect is important with the fact that, firms now increasingly look towards the development of their Sustainable Competitive Advantage based on the value addition to the company’s output at each level of the company (Kaplinsky & Morris, 2001). As the value chain, as explained later in this paper, encompasses the entire organization- classified as the inputs for the primary and secondary activities, the proper analysis of the same is very crucial to the overall development of the organization and its long term sustainability in this competitive world.
The analysis of the value chain of the Apple Inc. showed a very critical aspect in the manufacturing and production sector of the company. This is due to the fact that Apple Inc. does not have any manufacturing facilities to produce the hardware for its products. They, instead rely on the outsourcing of the manufacturing to Chinese corporations. This can be very detrimental to the company in the long run. Another aspect that could be improved is the Human resource aspect that makes a part of the support activity of the value chain.
Our recommendations would include to build manufacturing units to buffet the firm from external influences, to make changes in the technology aspect by making the operating system open sourced and to have more robust human resource policies to make it very employee friendly.
For a firm, Kotelnikov (2006), defined the value chain as the model, of the way in which the firms procure the raw materials, and these raw materials are put into the special process that add value to it to make is a commercially sellable products, that can be sold to the end customers.
The paper would do a value chain analysis of the company, Apple Inc. with a special focus on its most celebrated division, that of its smartphone- the Apple iPhone 5 and its predecessors. With this, the effect of the efficient development of a robust value chain on the success of the product offerings of the company would be discussed. With a special focus of the company- Apple Inc., the meaning of the value chain analysis to the success of the company, its advantages and possible disadvantages would be looked into. There would also be a section on the global business implication of the value chain on Apple Inc. in this paper.
The above analysis would give us a good insight on the input of the different value based components into the development and the sales of the products of Apple Inc. This lucid knowledge would thus enable us to develop own strategies and recommendations, on the effective management of the different aspects of the organization.
2. Value Chain- What is it?
According to Porter (2008) the value chain of Apple contains Primary and Secondary activities. Primary activity includes Inbound and outbound logistics, Operations, Marketing & Sales and Service. The value creating activities here are the Marketing & Sales activities that allow the company to sell more products. This is done by tie-ups and sponsorships. Efficient logistics systems by having a robust distribution channels can reduce cost and give the firm a long term Sustainable Competitive Advantage (SCA). Secondary Activities include Infrastructure, Human Resource Management, Technology Development and Procurement. Here Technology Development can create long term value as the firm can stay ahead of its competitors in developing better products. Developing robust procurement activities will generate value for the company like Apple, who is dependent on few sole suppliers and hence reduce the bargaining power of the suppliers.
The image below sums the activities that consist of the Primary activities and the Support activities of the value chain.
illustration not visible in this excerpt
Source: Porter, M, (2008), Competitive Strategy: Techniques for Analyzing Industries and Competitors, Simon and Schuster Publications, pp: 345
3. The merits and demerits of the Value Chain Analysis