Your Value Chain are those activities that your firm engages in as you transform inputs into outputs. There are two types of activities as part of your value chain, primary activities and support activities.
- Primary activities are those that are associated with generating revenue for your firm and often include activities such as managing your supply chain, facilitating business operations, distributing products, marketing, sales and customer service.
- Support activities are typically cost centers and are not associated with generating revenue, moreso providing service to other aspects of the organization. Support activities can include departments such as research, development, finance, information systems, human resources, accounting, and infrastructure that supports your processes and procedures.
Understanding how your firm generates value and where vulnerabilities exist will help you greatly in determining which aspects of your business can be further capitalized on and which need to be strengthened in order to enhance your ability to compete. As you analyze your business through the lens of the value chain, it becomes easier to determine the specific ingredients that make up the “secret sauce” of what makes you unique. It also highlights what you might be able to further capitalize on as you consider your options and the path forward.
Your core competencies in these areas distinguish you from your competition and enable you to realize a temporary or sustained advantage in relative comparison. How do you identify what your core competencies are? Consider the following questions:
- What resources or assets can your firm draw on? These can include cash, buildings, property, machinery, or intellectual property.
- What organizational capabilities does your team possess? These can include skills, culture, ways of doing business, etc.
- What organizational activities are unique and can be capitalized on? These can include organizational processes and other approaches to conducting business.
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