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Value Chain Analysis - Support Activities and Value Chain System (Modified)

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The Value Chain Analysis – Support activities and Value Chain System
The Value Chain System
The firm's value chain links to the value chains of upstream suppliers and downstream buyers. The result is a larger stream of activities known as the value system. The development of a competitive advantage depends not only on the firm-specific value chain, but also on the value system of which the firm is a part.
A firm's value chain is part of a larger system that includes the value chains of upstream suppliers and downstream channels and customers. Porter calls this series of value chains the value system, shown conceptually below:
The Value System ... | > | Supplier
Value Chain | > | Firm
Value Chain | > | Channel
Value Chain | > | Buyer
Value Chain |

Linkages exist not only in a firm's value chain, but also between value chains. While a firm exhibiting a high degree of vertical integration is poised to better coordinate upstream and downstream activities, a firm having a lesser degree of vertical integration nonetheless can forge agreements with suppliers and channel partners to achieve better coordination. For example, an auto manufacturer may have its suppliers set up facilities in close proximity in order to minimize transport costs and reduce parts inventories. Clearly, a firm's success in developing and sustaining a competitive advantage depends not only on its own value chain, but on its ability to manage the value system of which it is a part.
LINKAGES WITHIN THE VALUE CHAIN * NOT JUST A COMPILATION OF ACTIVITIES THAT ARE INDEPENDENT OF EACH OTHER; * INSTEAD, IT IS A SYSTEM OF ACTIVITIES THAT ARE INTERDEPENDENT BECAUSE THEY ARE RELATED BY THEIR LINKAGES. * THROUGH THE LINKAGES, THE PERFORMANCE OF ONE ACTIVITY AFFECTS THE COST OR PERFORMANCE OF ANOTHER. * THESE LINKAGES BETWEEN THE ACTIVITIES SUGGEST THAT THE

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