RDL 770

Rural Value Chain and Technology for Holistic Development-

RDL 770
 • A supply chain is the network of
• Individuals
• Organizations
What is supply • resources activities and
• Technology
chain? • Involved in the creation and sale of a product, from the
delivery of source materials from the supplier to the
manufacturer, through to its eventual delivery to the end
user.
Supply Chain is a connection of all the parties, resources,
businesses and activities involved in the marketing or
distribution through which a product reaches the end user.

It creates a link between the channel partners like suppliers,

manufacturers, wholesalers, distributors, retailers, and the
customer.

To put simply, it encompasses the flow and storage of the

raw material; semi-finished goods and the finished goods
from point of origin to its final destination i.e. consumption
Value Chain refers to the range of
activities that adds value at every
single step in designing, producing,
and delivering a quality product to
the customer.
Value Chain Analysis is used to
evaluate the activities within and
around the organization and relating
to its ability to provide value for
money, goods, and services.
Competitive
Strategy
• Thinking comes from Michael
Porter of Harvard
• Late 70’s developed 3 models to
help us think about strategy.
• 5 Force Model
• Value Chain
• Generic Strategies
Porter’s 5 Force Model Government
Regulation
Threat of
New Entrants

Bargaining Bargaining
Industry
Power of Power of
Rivalry
Suppliers Buyers

Threat of
Substitute
Products
 • Bargaining Power of Buyers (customers): Ability
of the customers to put the firm under pressure
to reduce prices.
• Bargaining Power of Suppliers: Power of
suppliers to control prices.
• Intra-Industry Rivalry: Competitiveness of a
5 Forces given industry.
• Threat of New Entrants: Profitable industries
attract new competitors. (Amazon producing TV
shows)
• Threat of substitute products and services:
Other entities that consumers can use, instead
of your product. (bike instead of car)
 • Creating a barrier to entry to would be
competitors.
• DLF Emporio Mall

• Utility, captive market

• To open an electric company would require a
Entry massive infrastructure
Barriers • Bar
• Liquor license is a cost that might prohibit
entrants
• Online mega-store like Amazon
• New entrants cannot compete with branding,
infrastructure and supply chain
 • Switching Cost – The cost of a customer to
switch to another product or service.
• Used to reduce the threat of new entrants
Switching and substitute products.
• Increasing Switching Costs
Costs • Deals for Staying with You (loyalty
programs)
• Memberships
• Contracts
What do we mean by value chain?
 Porter’s definition includes all
activities to design, produce,
market, deliver, and support the
product/service.

The value chain is concentrating on

What is the the activities starting with raw
materials till the conversion into
value chain? final goods or services.

Primary Activities
(operations,
distribution, sales)
Two categories: Support Activities
(R&D, Human
Resources)
PRIMARY ACTIVITIES
• INBOUND LOGISTICS
• - CONCERNED WITH RECEIVING, STORING,
DISTRIBUTING INPUTS (e.g. HANDLING OF RAW
MATERIALS, WAREHOUSING, INVENTORY
CONTROL)

• OPERATIONS
• - COMPRISE THE TRANSFORMATION OF THE
INPUTS INTO THE FINAL PRODUCT FORM (E.G.
PRODUCTION, ASSEMBLY, AND PACKAGING)

• OUTBOUND LOGISTICS
• -INVOLVE THE COLLECTING, STORING, AND
DISTRIBUTING THE PRODUCT TO THE BUYERS
(e.g. PROCESSING OF ORDERS,
WAREHOUSING OF FINISHED GOODS,
AND DELIVERY)
 • MARKETING AND SALES
• -Identification of customer needs and
generation of sales. (e.g. ADVERTISING,
PROMOTION, DISTRIBUTION)
PRIMARY
ACTIVITIES • SERVICE
• -INVOLVES HOW TO MAINTAIN THE VALUE
OF THE PRODUCT AFTER IT IS
PURCHASED.(e.g. INSTALLATION, REPAIR,
MAINTENANCE, AND TRAINING)
 FIRM INFRASTRUCTURE

The activities such as Organization

structure, control system, company culture
are categorized under firm infrastructure.

HUMAN RESOURCE MANAGEMENT

SUPPORT
Involved in recruiting, hiring, training,
development and compensation.

ACTIVITIES TECHNOLOGY DEVELOPMENT

These activities are intended to improve

the product and the process, can occur in
many parts of the firm.

PROCUREMENT

Concerned with the tasks of purchasing

inputs such as raw materials, equipment,
and even labor.
• A key distinction in defining value is whether the exchange that generates
• value is between firms – i.e., Business to Business (B2B) – or
• between a firm and a consumer – i.e., Business to Consumer (B2C).

• There are three forms of value that occur in B2B commercial transactions.

• • Technical (Resource Value);

• • Organizational (Business Context); and
• • Personal (Career)

• Technical value is intrinsic to the resource being provided and occurs in

virtually all exchanges. (Eg: Hand Churned Ghee; gold coin; food)
• Organizational value is built upon the context of the
exchange, and may derive from a range of factors such as
• ethical standards,
• prestige,
• reliability, and
• association.
Brand image may build organizational value, as well as
company reputation. E.g. When at a fine dining
establishment, the label on the water bottle generates value
far in excess of the bottle’s content.
• Personal and Technical Value

• Personal value is derived from the personal

experiences and relationships involved in the
exchange of resources and the benefits
provided.

• Technical and organizational value accrues to

the firms involved in a commercial exchange,
personal value accrues to the individual.: Ex
Happy Meals by McDonald’s
Manager motivation, preferences, feelings of comfort and trust
create value for individuals that engage in trading relationships on
behalf of firms, and can be extremely influential in the
determination of successful exchange.”

Finally, there are competitive forces affecting the market value of

any exchange of resources when comparisons can be made
between competing offers.

Competing offers can erode value (and margins) by making the

lowest price a deciding factor in evaluating an exchange.
• At the consumer level of exchange, value
is layered, and has been described by three
concentric rings.
• In the center ring is product value, the
technical value derived from providing a
source of supply.
• A second ring : service value is provided
by the services that surround the product
such as personal care and warranty service.
• The third ring : new service/quality
battleground, and was made popular by
business thinkers.
TYPES OF VALUE
CHAIN:
• Value Chain is categorized into types based on
the type of organizations.

• Manufacturing based.
• Service based.
• Both manufacturing and service based.
Requirements

Consumer Competitor Market

 • Your experience in getting • Question for discussion on
Questions ‘Wow factor’ next Tuesday
for • Your experience in getting ‘
service value’
discussion
• Make 3 student groups and
develop a plan for a value
chain with product value,
service value and wow value