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VALUE SYSTEM

MICHEAL POTER’S VALUE SYSTEM

Value system is the chain of activities from supply of resources through to the final con Sumption of a product or services. It consists of the linkage analysts with the suppliers and the consumers linkage under consumers. The upstream linkage happens with the suppliers and the downstream linkage occurs with distribution channel and the customers. An organization should identify and the core activities and should increasingly outsource the non-core activities for cost- reduction and ultimate value creation.

MANAGING GLOBAL VALUE CHAIN /SYSTEM:

The firm may consider two broad approaches

1. Configuration

2. Co-ordination

i) relates to where and in how many relation’s each activity of the organisation value each is performed.

The global business can configure their activities into two broad types

a) Concentration

b) Dispersion

Concentration: Relating value creating activity in the limited no: of location to take advantage of cheap labour cost, amendment raw materials and demand conditions.

Dispersion: It is spreading the activities to large number of locations when transportation cost is high and when the national markets differ significantly in terms, preference and the demand conditions.

ii) Co-ordination is concerned with management of dispersed international activating and linkages between those activities. It is about managing the complexities in between the activities and to ensure that all activities are synchronized towards achievement of the overall organizational goal. It may be of two types-

a) Internal condition with internal value creating activities.

b) External coordination though value linkages with three of the stake holders that is suppliers, distribution channel and the customers.



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