Value Chain Analysis of Procter & Gamble

“VALUE CHAIN” AS A TOOL A value chain is a set of activities that organizations carry out to create value for their customers. These activities are then analysed by Value chain analysis, which is a useful tool for working out how they can create the greatest possible value for their customers. This tool helps businesses change their inputs into their outputs in such a way that they have a greater value than the original costs of creating those outputs. This added value turns them in something that is of worth to other people. The value that is created and captured by a company is the profit margin. The more value an organization creates, the more profitable it is likely to be and more it will build the competitive advantage. VALUE CHAIN ANALYSIS OF PROCTER & GAMBLE The fundamental approach of value chain analysis has allowed P&G to obtain a competitive advantage over the other competitors in the industry. This process starts from the acquisition of the raw materials to the actual physical products sold by the company. The activities are grouped under two headings: primary activities and supporting activities.

S U P P O R T I N G A C T I V I T I E S

Financial Management

M

Human Resource Management Research & Development

A R

Inbound Logistics

Operations

Outbound Logistics

Marketing & Sales

Services G I N

PRIMARY ACTIVITIES

1) PRIMARY ACTIVITIES:

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Inbound Logistics: P&G’s raw materials are sourced from all over the world, where it is cost effective. Therefore for many years the company has focused on ways to improve its supply chain efficiency and costs. It has a powerful industrial network linking electronically to suppliers.

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Operations: P&G’s operations has four business units i.e. health and beauty, babies, snacks and beverages, and fabric and homecare; and offers more than 300 products. The company is using different softwares for new product development as well as for mechanizing and automating the knowledge...