THE VALUE IS THE TOTAL AMOUNT (i.E.

Total revenue) that buyers are willing to pay

for a firms products.

The difference between the total value (or
revenue) and the total cost of performing all
of the firms activities provides the margin .

The value chain is a tool developed by dr.
Michael porter(harvard business school)

Porters definition includes all activities to design,
produce, market, deliver, and support the
product/service.

The value chain is concentrating on the activities starting
with raw materials till the conversion into final goods or
services.

Two categories:
Primary Activities (operations, distribution, sales)
Support Activities (R&D, Human Resources)
Value Chain is categorized into types
based on the type of organizations.

Manufacturing based.
Service based.
Both manufacturing and service based.
Used to identify sources of competitive
advantage

Specifically:
Opportunities to secure cost advantages
Opportunities to create product/service
differentiation

Includes the value-creating activities of all
industry participants
Firm Infrastructure (General Management)
Human Resource Management
Technology Development
Procurement
Inbound
Logistics
Ops.
Outbound
Logistics
Sales &
Marketing
Service and
Support
PRIMARY ACTIVITIES
SUPPORT
ACTIVITIES
Primary activities:
Those that are involved in the
creation, sale and transfer of
products (including after-sales
service)
Inbound logistics
Operations
Outbound logistics
Sales and marketing
Service and support
Support Activities:
Those that merely support the
primary activities
Human resources
(general and admin.)
Tech. development
Procurement
Firm Infrastructure (General Management)
Human Resource Management
Technology Development
Procurement
Inbound
Logistics
Operation
s
Outbound
Logistics
Sales &
Marketing
Service and
Support
PRIMARY ACTIVITIES
SUPPORT
ACTIVITIES

1.INBOUND LOGISTICS
- Concerned with receiving, storing, distributing inputs (e.g.
Handling of raw materials, warehousing, inventory control)

2. OPERATIONS
- Comprise the transformation of the inputs into the final product form
(E.g. Production, assembly, and packaging)

3. OUTBOUND LOGISTICS
-Involve the collecting, storing, and distributing the product to the
buyers (e.g. Processing of orders, warehousing of finished goods,
and delivery)


4. MARKETING AND SALES
-Identification of customer needs and generation of sales.
(e.g. ADVERTISING, PROMOTION, DISTRIBUTION)

5. SERVICE
-Involves how to maintain the value of the product After it is
purchased.(e.g. INSTALLATION, REPAIR, MAINTENANCE,
AND TRAINING)


Firm Infrastructure (General Management)
Human Resource Management
Technology Development
Procurement
Inbound
Logistics
Ops.
Outbound
Logistics
Sales &
Marketing
Service and
Support
PRIMARY ACTIVITIES
SUPPORT
ACTIVITIES
1.FIRM INFRASTRUCTURE
The activities such as Organization structure, control system, company
culture are categorized under firm infrastructure.

2.HUMAN RESOURCE MANAGEMENT
Involved in recruiting, hiring, training, development and compensation.

3.TECHNOLOGY DEVELOPMENT
These activities are intended to improve the product and the process,
can occur in many parts of the firm.

4.PROCUREMENT
Concerned with the tasks of purchasing inputs such as raw materials,
equipment, and even labor.

The sources of the competitive advantage of a firm can be seen from its discrete
activities and how they interact with one another.

The value chain is a tool for systematically examining the activities of a firm
and how they interact with one another and affect each others cost and
performance.

A firm gains a competitive advantage by performing these activities better or at
lower cost than competitors.

Helps you to stay out of the No Profit Zone

Presents opportunities for integration

Aligns spending with value processes



Linkages can also exist outside the firm; for instance
there is a linkage between a firms chain and the value
chain of its suppliers and channels.

E.G. The activities of the raw materials suppliers affect the
activities of the firm. Similarly, the activities of the
distributor also affect the firm.
The value chains of the different firms
within an industry vary from one another.

In fact, the differences in the value chains
among the different industry players
provide the source of competitive
advantages between these players.
Value Chain & Value System of TATA
motors
Inbound


Logistic
s

Operations

Marketing

Service
Outbound


Logistics
Suppliers , Contractors
SAP , VCM
SAP , CRM - DMS
Strategic Alliances
Transporters, Convoy
Drivers Association
Dealer Network, Marketing
Research Firms, Vehicle
Financing
Regional Warehouses,
Dealer Workshops,
Distributors, TASS
Inbound Logistics
Long term contract with service providers transporters and
agents.

Personnel at regional offices for over seeing the smooth transit
of goods.

Transparency and monitoring through deployment of IT all
transactions through SAP.

DTL (daily transport logistics) supplies for critical high value
items.

Efficient storage facilities easy storage and retrieval.
Operations
Capital Equipment Manufacturing division tooling development capabilities of global standard.

Apprentice Trainee Course ensuring stable source of skilled manpower.

Kaizen & TPM(total productive management) team continuous drive to improve efficiencies.

Automated manufacturing processes.

Distributed manufacturing Assembly units at South Africa, Thailand, Bangladesh, Brazil etc.

Maintenance technical competence.

Capacity Utilization Mercedes Benz cars make use of Tata Motors paint shop facilities.
Outbound Logistics
Stockyards, all across the country.

Long term contracts with transporters higher volume of
business to transporters ensures competitive price.

Regional Sales Office and Vehicle Dispatch Section linked through
SAP.

Efficient security system for prevention of any kind of pilferage.
Marketing & Sales
Structured approach to understanding the requirements of individual customers QFDs
conducted at regular intervals.

Clear identification of product requirements, leading to development of innovative
products Tata 207 DI, Tata Ace

Pan India presence and global footprint.

Independent teams for addressing the requirements of institutional customers Defense,
State Transport Units

Helping to augment the scarce resources Fiat selling vehicles through Tata dealerships, in
return Tata has access to Fiats technology and unutilized capacity.

Quick assessment of the changing market dynamics and consumer preferences Tata 407
LCV

Large network of dealers use of technology (CRM-DMS).
Service
Easy availability of spare parts.

Efficient collection of data from field and communication to the
respective plants.

Pan India presence, as well as global presence.

Large network of workshops Dealer workshops and TASS.

Training facilities for dealer end and TASS personnel.
Procurement
E procurement initiative.
Global Sourcing Team China , a key destination for sourcing
essential items like tires, power steering units etc., Steel procured
from Belarus
Long term relationships with a stable and loyal pool of suppliers.
Technology driven procurement SAP and VCM.
Strategic subsidiaries & JVs TACO group of companies , Tata
Cummins
Centralized Strategic Sourcing for key components FIPs, Steel
etc.
Group resources Tata Steel and Tata International .
Localized supplier base at mfg. locations low inventory levels.
Technology Development
Approximately 2% of the annual profits of the company invested in research
and development.

Knowledge portal helps employees keep abreast with the latest technologies.

Extensive prototype building and testing facilities.

Strategic partnerships MDI (France), Fiat etc.

Formal benchmarking process.

Technology Day organized across all plant locations.
Human Resource
Vast pool of technically competent engineers and managers.

Focus on development of technical capabilities Technical
Training Centers, Alliance with technical Institutes

Focus on development of managerial capabilities MTCs , TMTC,
executive training programs at premier business schools

Career advancement schemes ESS, FTSS
Firm Infrastructure
Multi Location facilities

Strong leadership under the aegis of Tata Sons

Best in class prototype building facilities

Technology SAP

Large product portfolio