A Review on Value Chain Analysis as a Strategic Cost Management Tool (original) (raw)

Value Chain Analysis – Basic Element Of An Organization’s Competitive Advantage

International conference KNOWLEDGE-BASED ORGANIZATION, 2015

Competitive advantage is a difference in relative prices or the relative costs and it results from differences in their work done. These differences may occur in two different ways, namely either the organization performs better the same types of activities, or it chooses different types of activities. To establish whether between an organization and other competitors in the same industry there are differences in terms of relative prices and relative costs, it is recommended to make use of Porter's value chain, the more so as these differences are determined by the activities of the organization. Value chain plays an important role in the diagnosis of an organization's competitive advantage because through it we can get an insight into the mode of action of costs and the influences they have on the strategy that the organization has taken. Also, through the value chain there can be identified the potential sources of differentiation of products or services offered by the org...

Value Chain Analysis: A Brief Review

Asian Journal of Innovation and Policy

Value chain analysis has been applied in various fields, from the time the concept of "value chain" was introduced by Porter in 1985. Several frameworks have emerged and have been used to study individual firms, entire industries, industry clusters, as well as global production networks. The purpose of this paper is to provide a brief review of these frameworks, identify factors that influence the performance of value chains, and suggest areas for future research. Since there is a wide range of value chain literature, this paper focuses on a selective set of earlier works within the value chain model as conceptualized by Porter. The study takes note of the many dimensions and applications of value chain analysis, and shows that value chain analysis is an effective way to examine the interaction among different players in a given industry. The study further points out the shortcomings of the traditional or Porter view of value chain analysis.

Value Chain Analysis to Cost Efficiency

Proceedings of the 3rd International Conference on Accounting, Management and Economics 2018 (ICAME 2018)

This study aims to find how the implementation of value chain to achieve competitive advantage and cost drivers on primary activities and support activities at PT Makassar Agirsarana Utama (PT MAU). PT MAU is an exporting company that develops corn cob meals (CCM) business to meet export demand to Orient Generalize Co., Ltd. located in Naoetsu, Japan. This company utilizes agricultural waste that is corn cob to be a commodity with economic value that has not been utilized optimally in production centers in all regions of South Sulawesi Province. Value chain analysis is expected to provide a strategy to perform cost efficiency in achieving competitive advantage. This research is qualitative approach. The result shows that the activity that use the biggest cost is operational 36,36%, followed by out logistic 28,60%, company infrastructure 17,48%, human resource management 10,70%, purchasing 4,01%, and entrance logistic 2,86%. The primary activity in CCM production is the cost of non-value-added activities resulting in non-value-added costs in operational activities, out logistics, human resource management and corporate infrastructure. By using the value chain analysis, the company cannot eliminate such activities because it is important for long-term business of PT Makassar Agrisarana Utama (PT MAU) so that it is necessary to costs reduce consisting of labor costs, machine rental cost, container rental cost, office travel cost and consumption cost.

THE IMPLEMENTATION OF STRATEGIC MANAGEMENT ACCOUNTING BASED ON VALUE CHAIN ANALYSIS: VALUE CHAIN ACCOUNTING

To compete successfully in today's highly competitive global environment, companies have made customer satisfaction an overriding priority. They have also adopted new management approaches, changed their manufacturing systems and invested in new technologies. Strategic management accounting examines the decision-making linked with the business operations and strategic work of financial administration as support for the same. Strategic management accounting is a theory and practice of accounting that looks at an organization's cost position, cost advantages and product differentiation in order to make market decisions. The value chain is a systematic approach to examining the development of competitive advantage. The chain consists of a series of activities that create and build value. Value chain analysis refers to a structured method of analyzing the effects of all core activities on cost and/or differentiation of the value chain.With the growing division of labour and the global dispersion of the production ofcomponents, systemic competitiveness and so value chain analysis have become increasingly important. Value chain accounting is the combination of value chain analysis and accounting theory.Value chain accounting is an important part of value chain management and a further development of strategic management accounting. Value chain accounting is a new approach on accounting subject which is combined by the theories of value chain management, supply chain management, accounting management and information technology. From the analysis about value chain theory and strategic management accounting theory,this paper proposes an accounting management framework based on value chain analysis called value chain accounting.

The complementary association between value chain analysis and target costing system to strengthen the competitiveness: An applied study on Saudi manufacturing companies in Al- Kharj

Management Science Letters, 2018

The value chain and the target cost play significant role in achieving competitive advantage in many areas where both concepts are complement to each other. The two concepts also aim to reduce cost and maintain product quality. The current research aims to establish a framework of complementary association between value chain analysis and target costing system to achieve competitive advantage in manufacturing companies of Saudi Arabia. The study uses exploratory research to study the problem with the help of a structured questionnaire. The reported results show that target costing aids the manufacturing firms of Saudi Arabia in achieving the competitive advantage, and similar type of result holds with the value chain analysis. However, the target costing method is having an insignificant relationship with competitive advantage when combined with value chain analysis method, even after controlling for difficulties.

Analysis of Value-Creating and Supporting Component of the Value Chain in the Production Process

European Journal of Interdisciplinary Studies, 2023

This research focuses on the application of the Process Value Added (PVA) method in the environment of custom piece production at STS Prachatice a.s. The main objective was to identify the most profitable and most lossmaking processes, to evaluate the value added of individual production operations, to assess the potential for outsourcing certain processes, and to analyse the profitability of specific orders. The study uses a selection of 30 atypical orders from 2022, obtaining data on selling prices, production hours and costs associated with production and overhead. The analysis shows that manufacturing processes add the most value, while inspection processes are less profitable. Processes suitable for outsourcing were identified, especially when in-house capacity is not used. It was also found that the most profitable orders are those that combine high product uniqueness with efficient use of materials and production hours. The PVA methodology allowed to quantify the added value in the context of time and cost parameters and revealed that contracts with high time pool and unit costs have the most significant added value. PVA indices were established to better reflect the results achieved. The research findings have practical implications for the organization and efficiency of the production process at STS Prachatice, contribute to the development of business policy and procurement activities, and serve as innovative material for academic purposes. The study demonstrates that the PVA method is an effective tool for analysing and optimising business processes, enabling companies to better understand and manage process value-added in order to increase profitability and competitiveness. The implementation of this method in practice has shown concrete economic benefits and provided valuable information for further business policy and procurement solutions.

The Extent of Applying Value Chain Analysis to Achieve and Sustain Competitive Advantage in Jordanian Manufacturing Companies

Abstract This study aims at identifying the extent of applying value chain analysis (VCA) to achieve and sustain competitive advantage in manufacturing companies in Jordan. To achieve the study’s objectives, a questionnaire was developed and pre -tested. The population of the study consists of the (93) company which are listed in the Amman Stock Exchange of Jordan in the end of the 2012, (65) companies of them accepted to fill the questionnaires. (81.5)% of the distributed questionnaires was received. Descriptive and analytical statistical techniques such as frequencies, percentages, standard deviation, means, one sample T test and one way ANOVA were applied to test the study’s hypotheses. The study revealed the following results: manufacturing companies in Jordan apply VCA, but don’t use it to achieve and sustain competitive advantage and there is no statistically significant effect of the respondents’ demographic characteristics on their perceiving the importance of applying VCA to achieve competitive advantage. The study recommends manufacturing companies in Jordan train their employees on strategic analysis of the company's internal and external environment, exercise the value chain analysis, calculate the unit cost of production and enter them in courses for achieving and sustaining competitive advantage through cost reduction and differentiation strategies.

How to measure the " value " in value chains

Purpose – The purpose of this paper is to broaden the performance measurements of total supply chain performance. Design/methodology/approach – A conceptual model is presented based on the balanced scorecard. The new model formulates a model for the tangible aspects that measure the success of the total chain which is then extended to incorporate the intangible value adding aspects to measure total value chain success. Findings – A framework is presented showing the importance of intangible value adding aspects of the total value chain. Research limitations/implications – Future research may address in depth research associated with the five key intangible aspects given in the current model. Practical implications – The practical implementation of the required metrics in such a dynamic area as the supply chain industry needs to be focused on the aspects most required at particular times depending on the varying levels of market activities. Originality/value – This paper provides a broader performance model than the balanced scorecard or any other framework currently used in the supply chain literature.

New framework for value chain thinking

International Journal of Value Chain Management, 2018

The competitiveness of a commercial enterprise has long been defined as its ability to achieve cost or differentiation advantage. When companies possess the same capabilities, value creation is imperative as a new source of competitive advantage whose evolution relies on cycles of value creation, value delivery, and value capture. However, previous studies of the value chain concept differ in their definition of various types of chains. This paper proposes a new framework for value chain thinking (hereafter VCT) based on appreciative inquiry and service-dominant logic. The new framework is represented in four cells, or lenses, of VCT used to map and improve a company's value chain. The four lenses include: the traditional value chain, the innovation value chain, the shared value chain and the design-driven innovation value chain. Empirical evidence for the four lenses of VCT is provided by applying the framework to a quartet of companies that are known to implement value-innovation through their commercial practices. The results show that each of the four commercial enterprises matched VCT cells using value chain mapping, with its deficiencies being successfully diagnosed and its subsequent performance enhanced by means of its specific VCT cell.