Value-chain, is a set of value-creating activities that begin with the raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product or a service, and ending with distributors delivering the final goods into the hand of the consumer
Integration of value-chain, SJ to study vertical and horizontal integration of value-chain:
1. Vertical Integration – the degree of which the company operates vertically on an industry’s value-chain from extracting the raw materials to manufacturing to retailing, including backward and forward integrations. Vertical integration will benefit the companies by allowing them to control process, reduce costs, and improve efficiencies in which digitization initiatives will support to achieve these objectives
2. Horizontal Integration – the degree of which the company operates in multiple geographic locations at the same point of an industry’s value-chain, this may support entering new markets, increase market share, increase range of products (products portfolio), boost revenues, and diversified services offered by the company
Design value-chain, SJ to perform three steps in designing value-chain analysis:
1. Examine each product line’s value-chain in terms of various activities involved in producing a product or a service for each firm subject to study.
2. Examine the “linkages” within each product line’s value-chain, linkages are the connections between the way one value activity is performed and the cost of performance of another activity, to define the digital transformation change competitive advantage
3. Examine the potential synergies among the value chains of different product lines or business units, to design the cost of joint production of multiple products can be lower than the cost of separate production – example of economies of scale, for more competitiveness and productiveness status