VALUE CHAIN

Value Chain



Value Chain - Case Study of Aggreko Company

Introduction

During the previous years, numerous publically listed companies that are working within the same category of industries and companies that offer similar set of services and products, tend to be positioned very differently within the industry. These companies generate different profits, as a result of the increased level of competition and strategic decision that are made in accordance with the professional understanding of the consultants of the companies. The art and understanding of strategic decision making creates competitive benefits (Oswald, et, al. 2004 486). Such situations have highlighted the nee to adopt various innovative policies for strategic management even before the organisations start to design functions and activities of organisations. Therefore, the firms need to develop a model for analysing these organisational activities. The most popular and successful model for analysing the activities is known as Value Chain model. This essay will provide an overview of Value Chain and activities and analysis performed by the Aggreko Company will be examined as a case study. Furthermore, the essay will conclude with the research findings.

Overview of Value Chain

According to Johnson et.al (2011), value chain is defined as a process which describes the activities and functions performed by the organisations that are designed in order to produce a product and provide a service. This model of the value chain has helped Micheal Porter in forming his book, named “Competitive Advantage” in 1985. Johnson et.al (2011), the model of the value chain has two functions which act as an effective method for the consultant in understanding that every firm has a different set of activities and these activities are divvied into two categories: 1) the Primary Activities which are directly related to the products and services of the organisations. Michael Porter has divided these activities into five categories. Firstly, the inbound logistics- which means every activity is concerned with the responsibility of raw material, starting from the handling till the operations are categorised, like storing control and receiving control. Secondly, operations that are connected with the activities which transforms the raw material into finished products and services of the company. Thirdly, the outbound logistics - referred to stores and distribution divisions which help in distributing the products to consumers. Additionally, sales and marketing activity include all those activities that are in charge for introducing the product or service of a firm to its consumers or to spread awareness about the firm's product or service. In addition, service means the activity which supports in enhancing the value of the product or the service (James, 2005, 100).

Support Activity is the second category of these activities. It transforms all the activities into Primary Activity for increasing effectiveness and efficiency. Michael Porter has divided these activities into five categories that are stated below:

1. Firm infrastructure

2. Human resource management

3. Procurement

4. Technology development

Second activity of the value chain model specifies the strategic position if the firm in three different ways. It starts with highlighting the most essential sections of activities that ...