Value Chain and Porters Forces

Competitive Advantage
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Value Chain and Porter’s Forces
Value chains can be used to determine how a firm is fairing relative to its competition and can also be used specifically to create competitive advantage (NetMBA, 2011). It is a summary of most of the activities such as, operations, inbound logistics, outbound logistics, marketing, sales and services of the firm that determine if the firm will edge out the competition and offer the customers the very best of services and products (Berns, Townsend, Khajat, Bagopal & Reeves, 2009). As such, support aspects like the infrastructure of the firm, technological developments adopted, procurement and the human resources management, play a major role. This is a model that was initially proposed by Porter and is a crucial tool in determining the cost advantage of a firm and differentiation in reference to competence (Mindtools.com, 2015). The five forces proposed by porter, are also crucial to determining the ability of a business to outperform it competition. The five forces include the power of the suppliers, buyers’ power, competitive rivalry in the industry, threat of substation and the threat posed by the new entrants in the industry.
The mini cases
The Better Place
In the case of the Better Place, the company sort to streamline its value chain by employing the technological advents in car manufacturing. While most of the markets were offering gasoline powered cars, the company sought to invest in the future of motoring. Electric motoring technology would offer sustainable transportation (NetMBA, 2011). In light of the porter’s forces the company edged out a competitive advantage by using new technology in the industry to create a niche where it would compete profitably. By influencing the various governments and customers on sustainable transportation, the company made sure that it was driving the tide of the substitute products (Porter, 2008). This way it eliminated the threat of new entrants and substitution, while having direct influence on the suppliers with unique products. At the same time it reduced the level of competition rivalry in the industry by creating its niche early enough. The company entered in the market as one of the first players to ensure that it influenced its position in the industry (Berns, Townsend, Khajat, Bagopal & Reeves, 2009). By adapting new technology, the company enhanced its competitive advantage as most of the competition was manufacturing cars powered by gasoline, which is currently under criticism relative to global warming. Better Place has thus safe guarded its future position in the industry relative to developments of sustainable energy solutions globally.
Nike
In the case of Nike, it value chain was not just wasteful but also expensive and exploitative in terms of labor. In the 90s the company came under heavily damaging criticism relative to the violation of labor laws due to the practices applied by the suppliers in Asia. Relative to the wasteful value chain, material that could be used to make three shoes was used on only one or two. This resulted in a waste tuned to more than $700 million annually. Other than the monetary losses, the co...