Unit 2 Assignment GB570

Unit 2 Assignment: Competitive Advantage and the Value ChainThe purpose of this Assignment is to confirm your understanding of the direct correlation between an effective value chain and a firm’s competitive advantage by examining the relationship between customer delight, profitability, competitive advantage, and effective value chain management.DirectionsUse the APA formatted Microsoft® Word® document template in Course Documents titled “Unit 2 Assignment Template Competitive Advantage” (Attached) as the starting point. Download the template and save it as your own document, for example, YourNameUnit2GB570.docx.Write a 4–6-page paper, not including title and reference pages, making a compelling argument as to why an effective value chain creates competitive advantage.Write your paper using third person perspective (do not use first or second person pronouns; (e.g., “I,” “me,” “you,” “we”).In your paper, you will examine the concepts and interrelationships of customer delight, profitability, competitive advantage, and effective value chain management by following the directions included within the Unit 2 Assignment template. Included within this examination: Reference this book and the attachments to write about the assignment. “Understanding the Dynamics of the Value Chain (Supply and Operations Management)” by William D. Presutti. Start reading it for free: http://a.co/cuFJIf8Discuss each of the four elements.Examine the interrelationship between the four elements.Provide two examples of companies that have been successful in this integration, two examples of companies that have not been successful in this integration, and include explanations for your choices.Include a conclusion summarizing the paper’s content without introducing any new information.Support your response’s content with at least three separate applied and cited references. Accepted sources are: Library article(s), the textbook and the chosen example companies’ websites. No other internet references are acceptable for the Unit 2 Assignment. Apply and cite no more than one referenced sentence per paragraph. Not every paragraph requires use of a reference; originality is appreciated. Use APA in-text citations within the response and list the applied reference(s) at the end of the response using APA formatting. APA formatting resources are available in the Academic Resources area titled, “APA Style Central.”Proofread your paper, confirm correct APA formatting, run spell check and grammar check and proofread again.
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Running head: COMPETITIVE ADVANTAGE
Competitive Advantage and the Value Chain
Unit 2 Assignment
Student Name
Purdue University Global
GB570: Managing the Value Chain
Professor Name
Date (Month, ##, 201#)
1
COMPETITIVE ADVANTAGE
2
Competitive Advantage and the Value Chain
This first section is a one or two paragraph (s) introduction to your paper. APA
formatting does not use a section header named “Introduction”; instead the first section after the
main header assumes the content is introductory information. The first header is not bolded. This
first introductory area is good place to set the tone for the subsequent content. It is important the
paper’s content demonstrates original thought and exhibits appropriate judgments, conclusions
and assessment based on evaluation and synthesis of information. The main points of the paper
should be developed clearly. Supportive arguments should be logical. Content should be
appropriate to the assignment, interesting, accurate, and concise. The paper should be proofread
more than once. Any item listed on the references page must also be applied and cited within the
paper. All papers in this class require APA formatting. This Unit 2 paper should not include
content posted in the Unit 2 discussion.
This Unit 2 Assignment requires a 4–6-page paper, not including Title and References
pages, making a compelling argument as to why an effective value chain (including customer
delight and profitability) creates competitive advantage. This paper’s focus is different than the
topics covered in the Unit 2 Discussion (related to the four key dimensions of competitiveness).
The purpose of this Assignment is to confirm your understanding of the direct correlation
between an effective value chain and a firm’s competitive advantage by examining the
relationship between:
•
Effective value chain management
•
Customer delight
•
Profitability
•
Competitive advantage
COMPETITIVE ADVANTAGE
3
Write your paper using third person perspective (do not use first or second person
pronouns; (e.g. do not use “I,” “me,” “you,” “we”).
This template is already APA formatted: 1” margins, ½” new paragraph indents, 12 pt.
Times New Roman font, title page, one line page headers with page numbers, double line spaced
and a separate references page. When you use references in your paper to support your content,
be sure to apply the APA in-text reference citation format. Any item listed on the references page
must also be applied and cited within the paper. If you use verbatim quotes, place the words
within quotation marks, cite the reference and include a page number. If the quote ends a
sentence, place the period after (and not before) the in-text reference citation parentheses.
When you use section headers after the main section header above, center and bold them.
Note that this paper’s header (page headers are limited to no more than four words per APA), the
title of the paper on the title page, and the main header above use the same words.
Support your response’s content with at least three separate applied and cited references.
Accepted sources are: Library articles, the textbook and the chosen example companies’
websites. No other internet references are acceptable for the Unit 2 Assignment. Apply and cite
no more than one referenced sentence per paragraph. Not every paragraph requires use of a
reference; originality is appreciated. Use APA in-text citations within the response and list the
applied reference(s) at the end of the response using APA formatting.
Correlation Review: Competitive Advantage
In this section, describe the correlation between an effective value chain and a firm’s
competitive advantage by examining the relationship between (1) effective value chain
management, (2) customer delight, (3) profitability, and (4) competitive advantage. Discuss each
of the four elements. Describe the interrelationship between the four elements. You may use the
COMPETITIVE ADVANTAGE
4
following three sentences in your own paper (no reference needed). The following elements lead
organizations to creating a competitive advantage: effective value chain management, customer
delight, and profitability. These elements are all interrelated and together create a competitive
advantage for organizations. The elements will be discussed further to identify how they
interconnect to form a competitive advantage.
NOTE: sub-section headers should be left justified, bolded but not italicized and not
underlined. Paragraph content in the sub-sections should remain the same (1” margins, left
justified with ½” new paragraph indentations).
Effective Value Chain Management
In this section, in one or two paragraphs, explain what leads a value chain to be an
effective value chain. This is a good section to cite a sentence from the textbook related to why
value chain management supports the ultimate goal of earning and maintaining competitive
advantage.
Customer Delight
In this section, in one or two paragraphs, explain what types of value chain activities earn
customer delight. This is a good section to cite a sentence from the library related to why
customer loyalty supports the ultimate goal of earning and maintaining competitive advantage.
Profitability
In this section, in one or two paragraphs, explain how the Contemporary Value Chain
Model considers profitability as a crucial component for ongoing success. This section focused
on why a value chain must be profitable in order to maintaining competitive advantage.
Competitive Advantage
COMPETITIVE ADVANTAGE
5
In this section, in one or two paragraphs, explain the correlation between the previously
described three aspects as related to achieving competitive advantage. This is a good section to
cite a sentence from the textbook or a Library article related to why firms must hold competitive
advantage in their industry in order to survive long term and how these elements integrate to
make it happen.
Examples
This section will describe and explain examples of companies who have been successful,
and who have not been successful, integrating effective value chain management, profitability,
and customer delight to achieve competitive advantage.
Succesful Integration
Describe two examples of companies that have been successful in this integration (they
have an effective value chain, are profitable, earn customer delight and therefore hold
competitive advantage in their industry). Include explanations for your choices.
Unsuccessful Integration
Describe two examples of companies that have not been successful in this integration.
Include explanations for your choices.
Conclusion
In this section, summarize the paper’s content without introducing any new information.
This is the last section of the paper. There is a subsequent page break included so the next page
appears as a new page listing the applied and cited references.
COMPETITIVE ADVANTAGE
6
References
Presutti, Jr., W.D., & Mawhinney, J. R. (2013). Understanding the dynamics of the value chain.
New York: Business Expert Press, LLC.
—-Note: at least three separate applied and cited references are required for this Unit 2
Assignment. Accepted sources are: Library articles, the textbook and the chosen example
companies’ websites. No other internet references are acceptable for the Unit 2
Assignment.
Note: when you apply and cite references within your paper, use a separate References page.
The word “References” should not be bolded. How to format the textbook source using
APA is included above. Refer to the Writing Center APA resources regarding how to
correctly format Library materials and internet sources or select “APA Style Central” in
the Academic Tools area.
Note: References should be listed in alphabetical order.
Note: When you include more than one reference, do not add an extra line space between the
references.
Note: the formatting for margins on this page indents the word wrap ½ inch.
Note: all APA line spacing for all content of all papers must be set as follows:
Go to Page Layout
Go to “Spacing”
See the settings area:
Before = 0
After = 0
COMPETITIVE ADVANTAGE
7
Check the box “Don’t add space between paragraphs of the same style”
—Delete all of the red font and the directions included within this template before you submit
your own paper into the Dropbox. Be sure to run spell check, grammar check, and
proofread your paper.
The university’s Writing Center is available to review papers and if you tell them you are
in the MBA program, you will receive priority turnaround.
Unit 1
[GB570: Managing the Value Chain]
Unit 1 Key Terms
Competitive advantage: The positive differentiator(s) an organization holds over its competitors,
usually measured through sales, profit margins, market share, and brand loyalty.
Contemporary Value Chain Model: Based upon Porter’s 1985 Value Chain model, the Contemporary Value
Chain Model begins with defining customer need, and ends with providing and earning customer value. External
resources, idea generation, product development, supply chain management, budgeting and financial support,
information management, goals and strategy, culture and people, infrastructure, and leadership, are all
elements included between the beginning and the end goal and are all integral and fundamental to effective
execution.
Customer delight: A customer’s feeling for a company product or service that represents more than satisfaction
or met expectations with a purchase.
Customer excellence: Delivering superior value in meeting customers’ needs and wants. The process begins with
customer knowledge and ends with delivering customer and shareholder value.
Customer value: The end goal of an effective value chain; the benefits of sales, profit, customer loyalty and
brand equity, to the organization.
Integrated: A unified whole accomplished by bringing all interrelated parts together in harmony.
Linkages: Relationships between the way one value activity is performed and the cost or performance of
another value activity.
Porter Value Chain Model: First designed as a strategic planning tool to optimize competitive advantage, this
model from 1985 identified a system of nine generic interdependent activities. The Contemporary Value Chain
model used in this class is based upon Porter’s Value Chain Model.
Supply chain: Coordination and flow of goods, services, information and funds from raw materials through end
user; a process of anticipating customer needs and wants through the acquisition of capital and information, the
optimization and utilization of goods and services networks and processes to fulfill customer requests.
Value chain: an integrated management activity based upon a model of exceeding customer value expectations
profitably. The ultimate goal of a value chain is to sustain competitive advantage by optimizing customer value,
achieving performance objectives, and delighting customers.
Source:
Presutti, Jr., W.D., & Mawhinney, J. R. (2013). Understanding the dynamics of the value chain. New York:
Business Expert Press, LLC.
THE HIDDEN ELEMENT IN MANAGING THE VALUE CHAIN—
SHARING REWARDS FOR GOOD PERFORMANCE
William D. Presutti, Jr., Ph. D., C.P.M.
Associate Professor, Supply Chain Management
Palumbo-Donahue School of Business
Duquesne University
Pittsburgh, PA USA
ABSTRACT
The concept of the value chain was first introduced in a formal way in Michael Porter’s 1985 book
“Competitive Advantage.” Over the ensuing 25 years, much has been written about managing the value
chain and its component activities. That work has focused on the more technical elements of value
chain management. Little attention has been paid to issues relating to building the shared commitment
of the people involved in the value chain activities, commitment necessary for effective value chain
management. One of the keys to building that shared commitment is through the equitable distribution
of the financial rewards resulting from competitive and profitable value chains.
Introduction
A significant literature exists on the subject of the value chain, all of it born of the concept introduced by
Michael Porter (Porter 1985). The literature is replete with the how-to’s involved in managing the value
chain. There is no dearth of content on issues like building supplier relationships, inventory control,
managing transportation, distribution, warehousing, customer service, managing operations, the impact
of technology and other more technical issues.
The concept of the value chain demonstrates perhaps more than any other concept in business the
importance of internal and external collaboration. The typical focus of external collaboration is between
a firm and its customers and suppliers. Equally important is internal collaboration, the lateral
relationships among value chain participants and the relationships between management and nonmanagement staff. Without internal collaboration, the value chain breaks and resembles more a
collection of silos making any attempts at effective external collaboration difficult. In essence, the value
2011 Northeast Decision Sciences Institute Proceedings – April 2011
Page 1412
chain is a metaphor for shared commitment. What ought to follow is the equitable sharing of financial
rewards that emanate from successful performance.
It is through a well-managed value chain that a firm creates value and wealth for society. From the
input end to the final customers, the value chain designs the products and services, acquires the raw
materials and services necessary to provide the final goods and services that the market values and gets
those goods and services to the customers quickly and efficiently. Although easy to express in a few
words here, experienced practitioners understand the breadth and complexity of the activities and
linkages necessary to satisfy markets competitively and profitably. This process requires that the talents
and dedication of everyone in the organization be tapped to create sustainable competitive advantage.
It should logically follow that those who create the outcomes ought to share in the resulting benefits
through increased compensation. We know that business professionals need to manage the linkages in
the value chain if it is to be an effective instrument in organizational success. However, a link that is
almost completely ignored is the one that ties successful performance to financial benefits for all of the
participants in the value chain. That link addresses an important issue in the 21st century economy. The
issue is how the fruits of the success of an organization should be equitably shared to increase the sense
of identity that is a necessary condition for competitive advantage. {1} Although Porter presented a
comprehensive model of the value chain that included the secondary support activity of human
resource management (see Figure 1), his discussion related to that activity is silent on the issue of
reward sharing as is the existing literature on the value chain.
2011 Northeast Decision Sciences Institute Proceedings – April 2011
Page 1413
Porter’s Value Chain
Infrastructure
Supporting
Activities
Human Resources Management
Technology Development
Service
Marketing
and Sales
Outbound
Logistics
Operations
Primary
Activities
Inbound
Logistics
Procurement
Figure 1 {10}
Another model of the value chain suggests that culture and people make up one of the foundation
pillars of the value chain. The culture is one dominated by collaboration. The people should be selected
and compensated to reinforce that cultural value. (Presutti/Mawhinney, 2009) See Figure 2.
{11}
2011 Northeast Decision Sciences Institute Proceedings – April 2011
Page 1414
Figure 2
This article is an attempt to make a contribution to the value chain literature by addressing the reward
sharing issue. It presents a rationale of why the issue is important , defines what is meant by shared
rewards, presents a justification of why a shared rewards system ought to be a component of the value
chain, provides examples of organizations using a shared rewards approach, and expands on the
definition of a “sustainable business.” There is no attempt to prescribe a specific approach to shared
rewards although some basic considerations in designing such a program are presented. The existing
management literature thoroughly addresses the design issues.
Justifying Rewards Sharing
Consider this observation: “An economy works well when people personally identify with it , so their
self-esteem is tied up with its activities…This is especially relevant today because a relatively
uninterested, insecure workforce is unlikely to bring about a rigorous (economic) recovery.” {14}
Although that comment addresses the current state of the U. S. economy, the observation applies
2011 Northeast Decision Sciences Institute Proceedings – April 2011
Page 1415
regardless of economic conditions. How is that identification achieved, the lack of interest and
insecurity overcome? One of the keys is to develop a true sense of ownership in the organization. That
ownership perspective builds esteem by the identification with a successful enterprise. In essence what
we need to do is make every person a capitalist. Although the average value chain participant does not
invest financial capital in the firm, he or she invests something equally valuable—time and talent.
There needs to be a return on that investment over and above a wage or salary if that personal identity
with something larger than the wage or salary is to occur.
That the identification issue needs to be developed and reinforced is demonstrated by a few revealing
statistics. Worker productivity in the U. S., aided by advances in technology, has grown an inflationadjusted 50 percent since the mid-1970’s. Yet the income of the average worker, those in the value
chain whose energy and talents make a difference day-by-day has stagnated. It is estimated that if the
gains in productivity had been evenly shared across the workforce, the typical worker’s income would
be about 35 percent higher now that it was in the mid-1970’s. {16} Then, perhaps, income disparity in
the U. S. economy would be less of an issue than it is today. {Note 1}
Managing an effective value chain requires collaboration throughout the organization, not just laterally
but from top to bottom. In essence, a sense of teamwork needs to permeate the organization. That is
difficult to accomplish when those at the top are making 250-400 times what the average worker earns.
In 1965, it was 24 times. (Wallis, 2010) “Twenty years ago, people would view today’s ratio of CEO pay
to frontline pay as a disaster for the organization, destructive to any sense of collaboration.” {13}
Since effective value chain management requires collaboration among participants and since this
collaboration requires a sense of identity by participants as meaningful members of the team, then
2011 Northeast Decision Sciences Institute Proceedings – April 2011
Page 1416
reward sharing must become part of the discussion when issues involving managing the value chain are
raised.
Sharing Rewards Through Variable Compensation
“Variable pay plans are organizational systems for sharing economic benefits of improved productivity,
cost reductions, quality, and overall business performance in the form of regular cash bonuses.” {12}
Variable pay ties a portion of a person’s compensation to overall company performance and, thereby,
gives the value chain participant a stake in that performance and reinforces the importance of
collaboration brought about by a heightened sense of identity with the organization.
Effective collaboration will help to define the culture of successful organizations as we move through
the 21st century. “It is teamwork and cooperation, some of the essential skills o …
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