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Reconstructing Value Chains

It’s largely about determining the vertical boundaries of the firm

Stewart Anderson
Wed, 06/13/2012 - 12:47
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The production and provision of any product or service requires many activities to be performed. The pattern of activities that a firm adopts to create and deliver value to customers is commonly called the value chain (or value stream). A key issue in competitive strategy is how to organize a value chain to provide superior value to customers and create price and cost differentials from rivals.

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Other than start-ups, most firms operate with legacy value chains. These comprise the activities that have grown up with the firm as it has evolved. Reconstructing legacy value chains to offer different value at different prices and costs is often overlooked as an important part of continuous improvement.

Many firms set about making incremental improvement in their value chains by seeking greater efficiencies and effectiveness in the way activities are carried out. Value chain reconstruction, in contrast, is not incremental; rather, it is a large-scale transformation of an existing value chain into a completely different pattern of organization.

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Comments

Submitted by ARAVIND on Wed, 06/20/2012 - 00:33

Nice article

Dear sir,

Iam working on re-engineering of our organisation and this article has come at very right time.Article has very valuable information ,crisply written which will help for people working on business process reengineering.Thanks a lot !.

Thanks to Quality digest for  publishing this article 

Aravind

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Submitted by AlexDail on Fri, 06/22/2012 - 21:06

Easy To Follow

Thanks for a well written and even easy to follow explanation of reconstructing value chains; I have very little experience with the subject yet your article was easy to understand.

Alex

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