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Value chain analysis involves the competitive advantage of a business and all the activities that place in a business. Values chain analysis leads a business to understand what is best for it to undertake and also what others do to be successful and how to surpass their competition. A business undertakes this analysis because they want to gain the competitive advantage other others. Value chain analysis can be broken down to three processes which include how to break the market, assessing the potential of how to have comparative advantage and determination of strategies that will help gain the strategic advantage.
For a company to gain comparative and competitive advantage, a business must consider the three steps undertaken. These steps include activity, value and evaluation analysis.Activity analysis involves identifying waysto entice the customer. Samsung production of Dram was influenced by the activities that the company wanted. This included identifying the operation activities, delivery, support and the marketing the company does. This includes the motivation to employees, efficiency and the skills that are needed to produce that product. The competition from the other companies was the motivating factors that led to Samsung development of first chips.
The other step involves the value analysis. This includes the efficiency of the product as per the customers wish, taste and satisfaction. The aspect of the company to reduce the cost of production and increase the efficiency of the chips led Samsung to develop the 8-inch chips to enhance customer satisfaction. This involved Samsung identifying those factors and jotting them down to ensure that they viewed and came to a consensus on how to reduce those factors and enhance better products.
The next aspect involves the evaluation of the changes eminent from the product. This includes the progress of the product interms of how it performs and the advantages it has with regards to the disadvantages.This includes the company working on the cheaper products that will advance better than the others. The linkage between these three processes is tied in that one process should help the other succeed.
The comparative and competitive advantage of Samsung in respect to the other companies was also enhanced by their technology. The wanted to bring better technology and used better technology. The ability also for Samsung to survive the competition around it gave it the motivation to prosper ahead. Samsung method of having differentiated products has also played a part in the success of the production of the 8-inch chips. The ability of Samsung also to have lower prices has led to it having low cost advantage over the others.
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The method that should be used to calculate the value analysis includes the identification of profit. This profit is obtained from the subtraction of costs from the income obtained.This involves costs including human resource, material and overhead costs. The subtraction of these costs leads to the profit achieved. The profits obtained should be calculated per the total hours that each employee work.
Businesses that use value chain analysis have the ability of improving the total management of resources and strategic planning that enhances the growth of the business. This analysis involves, enhances and establishes the company or business to know how to gain competitive advantage over the others.