Value Chain System Essay Example for Free

cheer Chain System EssayThe value filament concept was created by Michael Porter and explained in his moderate Competitive Advantage, published in 1980. The value chain is a series of activities that create and work out value- culminating in the contri hardlyion of total value to the organization. Porter used the concept of value chain as a systematic approach to examining the development of an organizations competitive advantage in the marketplace. In using the value chain concept, the total activities undertaken by a business are split into aboriginal Activities and Support Activities. Primary activities relate to inbound logistics, operations, outbound logistics, marketing and gross sales, and service. Support activities include procurement, technology development, charitable resource management, and firm infrastructure. IntelNo doubt, Intel has emerged as the market leader in the design and manu eventure of micro motionors, having an approximately unbeatable advantag e all oer its competitors. Yet Intel has realized that the best way to retain its market billet is to make it easy and efficient for people to do business with the company.Since 1998, Intel has developed and used an e-business schema to harbor relationships with its guests, employees and suppliers. The companys goal is to become a 100% e-business enabled corporation. In terms of the value chain concept, Intel has made remarkable progress and reaped tangible benefits in the volume of business it does on the vane, as rise up as created savings of time and money for both itself and its guests. (Pallato, 2001) Let us analyze Intels strategy in terms of the primary value chain activities Inbound LogisticsPrior to implementation of its e-business initiative, Intel used the handed-down methods of pen, paper and telephone to place and track its supplies and suppliers. Furthermore it ordered supplies only in response to node orders. Consequently the company lost out on many busines s opportunities, where it could not meet indispensableness demands, changing customer needs or large orders for want of adequate stock. However this all changed with the show of its e-business initiative in 1998.Today, Intel uses the Internet to speed the flow of information between itself, its suppliers and customers. By tracking its deliveries and supplies over the Web, the company has humiliated its order and manufacturing lead times. It tracks its supplies from various countries all over the world. Intels goal is to lean towards a 100% automated system for its supplies and purchases. Operations Intel uses its Web based e-business system to aid in the quick exchange of details and queries pertaining to customer orders, design specifications and proprietary information.Design specifications and models lavatory change every 6 months. Intel has many made-to-order deals with big volume direct customers and this almost instantaneous system sack up s keep up off a week or two in design and delivery of the give way-place product, enabling the product and its suppliers to take full advantage of its novelty and scathe in the market. Outbound Logistics Intel uses its nett based system to track deliveries to customers and resellers. It can thus expedite delivery by noting friction points, ascertaining the reasons and smoothing shipments there.victimization its vendor driven inventory management system, Intel can maintain its inventory levels to respond to fluctuating customer demand, make reliable forecasts and shipments on time. Marketing Sales Intel has also improved time to market for its products to customers. By putting its customer order entry system on the Web, it has reduced errors by 75%. It can take orders round the clock, where more than 25% of its transactions occurring after normal business hours. Its great power to sustain links with over 75,000 system resellers worldwide has led to considerable increase in its sales volumes.Online sales do ubled from US$ 1 billion to US$2 billion a month. Hundreds of Intel suppliers use the Web to check the status of inventory levels, payments and shipments. Service Intel focuses on many areas of support and service for all its products. From mature data centers, application platforms, architecture planning, integration of business applications, e-commerce applications and solutions, system migration and server consolidation. Employing a set of super skilled consultants having considerable technical expertise in designing, building, implementing and optimizing solutions on Intel architecture.Intel provides a variety of services in the areas of wireless, hardware design, networking and communications, software development, business strategies and solution providers. Intel has established alliances with other leading software technology providers and solutions such(prenominal) as Oracle and SAP to give added value to its customers. It has a variety of solution blueprints on its websit e advertise its successful applications from a variety of industries. A database of solution providers and resellers of Intel products and solutions has been provided on a technological, geographical and language foundation garment for ease of access and use. Intel Website).The success of Intels value chain can be judged by the fact that it helped the company earn revenues of US$30. 1 Billion in 2003. The company has over 78,000 employees worldwide, with 294 offices and facilities for its 450 odd products. Intel was ranked 53 in the list of Fortune500 companies in 2003. By converting from its EDI systems to one using its RosettaNet business process standards with XML forms, Intel is judge to make further giant strides in the way it does business. (1) Spectrum PharmaceuticalPorters five campaign out analytic thinking is used to analyze Spectrum Pharmaceutical in the pharmaceutical patience. Porters five forces analytic thinking is a method of analyzing an industry and a compa nys business strategy. It uses five fundamental forces that cook competition within an industry and how a company functions within that industry. These five forces involve market forces and determine creator of the business, suppliers and customers. The first force that a company must deal with is the bargaining power of customers. In relation to Spectrum Pharmaceutical, the customers have very little power to bargain prices with the company.The products that Spectrum provides are unique niche products that the customer cannot obtain anywhere else. This gives the customers little bargaining power with the company. This makes the products that Spectrum produces more profitable for the company, but more big-ticket(prenominal) to the customer. This makes the products more expensive however, which makes them more profitable for the company. at that place are few substitutes for these products, which reduces the buyers leverage to negotiate pull down prices. The buyers have little concentration which reduces their ability to negotiate glare prices. payable to lack of alternative products there are few substitutes for Spectrums products. entirely these reasons combined to readyher give the buyer of the products little force to negotiate lower prices, but give the company a lot of power to maintain their heights prices. The second force in the analysis is the bargaining power of suppliers. In this instance, the suppliers to Spectrum have little power to affect the price of the final product. There are some(prenominal) different firms that can supply Spectrum with the undeniable products for spectrum to manufacture their products.This gives the suppliers little leverage to boost prices to Spectrum, which in turn helps to keep the price of supplies low. There are usually several alternative products on the market that Spectrum can use to manufacture the necessary goods. delinquent to the lack of concentration of suppliers, they have little leverage to negot iate advanceder prices which would squeeze the profits of Spectrum. In addition, the cost of inputs in the price of Spectrums products is very low compared to the final cost of the product. The regulatory process is a much more expensive input to the final cost of goods than the raw material inputs.All these reasons combined give suppliers little force to digest prices to Spectrum, and have little baffle on the price to the consumer. The next force in the analysis is the threat of substitute products. Several different substitute products free the consumer to substitution to other products and lower price products. This price elasticity keeps prices lower for the consumer and limits the ability of the company to raise prices. There are few substitute products for drugs that Spectrum manufactures. Consumers have little alternative choices for Spectrum products.This reduces the ability of the consumer switch to lower cost products. This keeps the product prices laid-back and red uces the leverage of the consumer has to keep prices lower. All these reasons combined, keep reduce the force of the consumer to maintain little ability to keep prices low and allow Spectrum to charge advanceder prices for its products. The next force in the analysis is the threat of new entrants into the market. If it was easy to enter the market with new and competing products, the ability to keep prices blue would be reduced.This however, is not the case with Spectrum. It is extremely expensive for new entrants to arrive at into the pharmaceutical market. It is costly in both money and time to get new drugs to market. The regulatory process insures that new products to the market have been tested at several levels. This testing is expensive in time, money and expertise. It takes several years to get new products through the regulatory process and new products to market. This high cost limits the number of new entrants into the market. There are many barriers to entry into the market.In addition, Spectrum holds patents that limit market competition for several years. Even though the pharmaceutical business is highly profitable, there are few competitors in the marketplace due to the high entrance costs and other barriers. The capital costs to enter the marketplace limit the number of competitors in the marketplace. The high capital, labor and other costs limit the force of new entrants to compete against Spectrum in the marketplace. The barriers to introduction the pharmaceutical business limit competition and ensure that drug companies can maintain higher prices.The last force in the analysis is the intensity of competitive rivalries. Industry rivalries can increase the competition for the consumers money. This can keep costs down and reduce profitability. Even though there are several companies in the pharmaceutical business, the total business is extremely large. The high costs of entering the market reduce competition. The high capital costs, the re gulatory process and the barriers to entry, reduce competitive rivalries within the industry. The industry has a high growth rate, especially as the older population grows.In most cases there is little over production and over capacity. It takes a lot of technical expertise in many different areas to get into the pharmaceutical business. There are advertising campaigns in the few areas where there are substitute products, but this mostly limits the size of the market and not profitability. Due to the extremely high profits, most companies have a strong incentive to innovate, market and remain in the business. All these reasons combined limit the competitive tilt that would reduce the profitability of firms in the pharmaceutical industry.In summary, the Porters five force analysis of Spectrum Pharmaceutical show few limits on its ability to compete. Customers have little ability to bargain lower prices with the firm. Suppliers to Spectrum have little ability to raise prices to the c ompany and have little influence on the cost structure of the final product. There are few substitute products to the drugs that Spectrum produces, this reduces the ability of consumers to switch to alternative lower price products, and ensures the ability of Spectrum to keep prices high.The high capital costs and the regulatory rocess reduce the number of new competitors in the pharmaceutical industry. This reduces competition for companies in the drug business and helps to reduce intent and keep prices high. The last force in the analysis is threat of competitive rivalries. This is relatively low for Spectrum. The high capital costs to enter the business and the barriers to entry into the market help keep competitive rivalries low. Due to the size of the industry and few competitors that can overcome the entrance barriers, limit the rivalry and allow the industry to by highly profitable.