1. October 7, 2016
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2. VALUE CHAIN
 Porter’s definition includes all activities to design, produce, market, deliver,
and support the product/service.
A value chain is a set of activities that a firm operating in a specific
industry performs in order to deliver a valuable product or service for
the market.
Way of organizing the activities of a business so that each activity adds
value (value added activity) or productivity to the total operation of the
business.
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3. TYPES OF VALUE CHAIN
Value Chain is Categorized Based On The Type Of
Organizations.
Manufacturing based.
Service based.
Both Manufacturing And Service Based.
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4. VALUE CHAIN ANALYSIS
Value Chain Analysis is a useful tool for working out how
you can create the greatest possible value for your
customers. In business, we're paid to take raw inputs, and
to "add value" to them by turning them into something of
worth to other people.
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5. October 7, 2016
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6.  Introduced by Michael E. Porter in his influential book “Competitive Advantage” in
1985.
 Can be used by companies to examine all of their activities in the process of converting
inputs to outputs.
 How value chain activities are carried out, determines costs and affects profits.
 The value that's created and captured by a company is the profit margin (Value Created
and Captured – Cost of Creating that Value = Margin). October 7, 2016
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7. Inbound Logistics.
Operations
Outbound Logistics
Marketing and Sales
Services
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Primary
Activities
Involve the purchase of
materials, the
processing of materials
into products, and
delivery of products to
customers.
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8. Firm’s Infrastructure : These are a company's support systems,
and the functions that allow it to maintain daily operations.
Accounting, legal, administrative, and general management are
examples of necessary infrastructure that businesses can use to
their advantage.
Human Resource Management : This is how will a company
recruits, hires, trains, motivates, rewards, and retains its workers.
People are a significant source of value, so businesses can create a
clear advantage with good HR practices
Technology Development : These activities relate to managing
and processing information, as well as protecting a company's
knowledge base. Minimizing information technology costs, staying
current with technological advances, and maintaining technical
excellence are sources of value creation.
Procurement : This is what the company does to get the resources
it needs to operate. This includes finding vendors and negotiating
best prices.
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Support primary
activities and can play a
role in each primary
activity.
It may also support each
other within support
activities.
Support
Activities

9.  The value chain is a very flexible strategy tool for looking at your business.
 Used to analyze and create competitive advantages on both cost and difference.
 Understand the organisation issues involved with the potential of making customer
value commitments and potentials
 Adapted for any type of business (manufacturing, retail or service, big or small).
 The deeper understanding of your strengths and weaknesses to be included in
your SOWT analysis ( you vs competitors)
 Well known and has been a support plan for teaching in business schools (last 20 to 25
yrs.) October 7, 2016
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10. It has to be adapted to a particular business situation and that can be a
disadvantage since, to get the best from the value chain.
Many people are familiar with the value chain but few are experts in
its use.
The scale and scope of a value chain analysis can be threatening.(full
value chain is difficult)(your vs competitors)
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11. TATA MOTORS
(A Manufacturing Based Company)
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12. Value Chain & Value System of TATA Motors
Inbound
Logistics
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
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13. Inbound Logistics
 Long term contract with service provider’s – 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.
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14. OPERATIONS
Capital Equipment Manufacturing division – tooling development
capabilities of global standard.
 Apprentice Trainee Course – ensuring stable source of skilled
manpower.
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 capability.
Capacity Utilization – Mercedes Benz cars make use of Tata Motors
paint shop facilities.
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15. OUTBOUND LOGISTICS
 Stockyards, all across the country.
 Long term contracts with transporter’s – 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.
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16. Marketing & Sales
 Structured approach to understanding the requirements of individual customers –
QFD’s 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.
 Various teams for addressing the requirements of institutional customers –
Defense, State Transport Units
 Quick assessment of the changing market dynamics and consumer preferences –
Tata 407 LCV
 Large network of dealers – use of technology (CRM-DMS). October 7, 2016
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17. Service(TASS)
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.
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18. SUPPORT ACTIVITIES
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19. Procurement
E procurement initiative.
Global Sourcing Team – China 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.
Group resources – Tata Steel and Tata International .
 Localized supplier base at mfg. locations – low inventory levels.
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20. Technology Development
Approximately 2% of the annual profits of the company invested in
(R&D).
 Knowledge portal – helps employees keep up-to-date 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.
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21. Human Resource
Vast pool of technically competent engineers and
managers.
 Focus on development of technical capabilities –
Technical Training Center’s, Alliance with technical
Institutes.
 Focus on development of managerial skills – MTC’s ,
TMTC
Career improvement schemes – FTSS . October 7, 2016
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22. Firm Infrastructure
Multi – Location facilities.
 Strong leadership – under the support of Tata Sons.
 Best in class prototype building facilities.
 Technology – SAP.
 Large product portfolio.
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