Vca to Support the Business Model

Value chain analysis

A value chain analysis helps organisations to determine costs associated with an organisations activities and can help a firm to identify its strength and weaknesses. It is broken down into primary activities and supporting activities.

According to Lynch (2003), value chain is defined as the links between key value adding activities and their interface with the support activities. The value chain of Tesco has been demonstrated in the following diagram:

Inbound Logistics

The company uses its leading market position and economies of scope as key bargaining powers to achieve low costs from its suppliers.  

Operations Management

Tesco has been praised for its effective use of IT systems that facilitate the company’s low cost leadership strategy due to the company’s investment of over £76 million in streamlining its operations through their Tesco Digital program. One real effect of this is the minimisation of stock holdings within the company.

Outbound Logistics

Tesco holds leadership position in online and offline food retail segments, which is due to its efficient and effective outbound logistics.  The company has developed a range of store formats and types, which are strategically placed according to the target population.

Marketing and Sales

Loyalty programs like Tesco Clubcard are being introduced through information technology advances which dissuade the customers from switching over to their competitors

Services

Tesco has been pursuing a dual strategy of cost leadership and differentiation, which has led to an increased importance placed on customer service

Conclusion

In light of the above analysis, it can be concluded that Tesco continues to hold its leadership position and has been able to achieve this with the help of a lean and agile supply chain management, along with the strategic use of information technology.

Organisations can use the VCA to identify areas where they are weak and as such they can focus on...