Strategic Financial Analysis The value chain identifies the primary activities and related support activities that create customer value. The value chain provides a deep look at the firm’s cost structure and ability to offer low prices. It reveals the importance a firm places on its activities that could enhance differentiation and higher prices. A company’s value chain demonstrates a comparison, activity-by-activity; of how cost effective and efficient a firm delivers value to its customers. The value chain is used to segregate the firm’s operations into different types of primary and secondary activities to determine the major components of its internal cost structure. Evaluating a value chain can have an impact on the organization’s cost and margins of supplier and direct partners, affecting price to end customers. "The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labor, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits."—IFM, Cambridge. Benchmarking is critical tool for improving a company’s (own) internal activities that are based on learning how other companies perform them and borrowing their “best practices.” Benchmarking assesses whether the cost competitiveness and effectiveness of a firm’s value chain activities are in line with its competitors’ activities. Benchmarking the costs of company activities against rivals provides hard evidence of whether a company is cost-competitive.
Analysis
Inbound logistics is the movement of materials from suppliers and vendors into