CRITICAL EVALUATION OF VALUE CHAIN ANALYSIS FOR ASSESSING COMPETITIVE ADVANTAGE-A STUDY ON SELECT COMPANIES OF E-TAILING INDUSTRY.

Author:Razak, Abdul
 
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INTRODUCTION

Competitive advantage for an organization means not just matching or exceeding what competitors can do, but ascertaining what customers want or expecting from an organization and then satisfying customers profitably, and even sometimes exceeding their level of expectations (Dambudzo, 2013). Due to globalization, the barriers of inter-regional and international trade have lessened and access to products has become very easier. Consumers can trace and get the best product as per their requirements, at an affordable price, whenever and wherever let it be in the globe. The rise in customers' expectations and increasing competition among competitors makes a company restless and try to achieve core competence (Bryson, 2018).

A Value Chain analysis is a Strategic management tool which is used to measure the significance of the customer's perceived value. By making the organizations to determine the strategic advantages and disadvantages of their accomplishments and value-creating processes in the marketplace, VCA (Value Chain Analysis) becomes an essential element for assessing organization's competitive advantage. This is mainly addressed to managers, management accountants and top-level management who are part of decision making who takes an effort in implementing value chain analysis in their respective organizations (Antoniou et al., 2011). The concepts, tools and techniques presented here apply to all organizations that manufactures and sell goods and services.

Today, Organizations face huge competition in the global market place. In order to sustain and improve competitive advantage, organizations have to determine to what extent they are capable in meeting or exceeding the dynamic expectations of the consumers. As an important tool of strategic planning, value chain analysis looks at value creation across the complete range of activities and processes that shape the ultimate offering to the consumers and offers important vision to the organization's long-term growth and existence (Chen, 2009). The present study defines concepts and techniques of value chain analysis; describes the main requisites and elements of the value chain approach: internal cost leadership analysis, internal differentiation analysis and vertical linkage analysis; plans three useful strategic outlines i.e., industry structure, core competencies and segmentation; and discusses the trends, issues and challenges that are involved in value chain analysis. The concepts and techniques presented can be practical and applied in all types of organizations.

Significance of the Study

Most of the successful and creative organizations have a corporate level strategy with corporate scorecard to lead the big picture. Each business unit within the firm then has a Business level strategy, where the leaders use to control how the firm will compete in the individual markets and establish competitive advantage. In turn, each team should have own strategy to ensure that the day-to-day activities help the organization to move in the right direction. At each level determining how the firm is going to win in the period ahead. Large enterprises have always been a strategic component of developing economies (Porter, 2008). The study is undertaken to explore how enterprises have adopted value chain analysis in assessing Competitive advantage in different levels of strategy.

REVIEW LITERATURE

Overview of Literature

The value chain activities include research and development, design, production, marketing, distribution and lastly after-sale service. These support activities are set of supplementary activities that includes accounting, finance, human resources and information technology (Schmitz, 2005) and Each and every activities in the value chain added value from the perspective of the customer (Horngren et al., 2012).

Value chain analysis is a strategic tool that helps in building a structural strategy of an organization; (Coulter & Robbins, 2009). It mainly focuses on the activities that create value and the activities that do not create value to the customers will be enhanced and improves rendering services (Thompson et al., 2005).

The value chain analysis defines the full range of activities which are required to bring a product or service from commencement, through the different stages of production, final delivery to ultimate consumer, and disposal after use (Porter, 1985). Competitive advantage develops the way as the organization organizes and performs separate activities. The performed activities, when competing within a particular industry, can be categorized into primary activities and support activities. Primary activities involves on-going production, marketing, delivery, and servicing of the product and services whereas support activities includes procurement, technology, human resources activities and the other infrastructure functions supporting the other activities (Porter, 2012). When an organization acquire resources, technology and have the capacity to make changes in products and services in order to satisfy customer needs and want, or has the capacity to react and adapt quickly as per the changes in the competitive environment (Dahlstrom & Ekins, 2006).

Objectives of the Study

The study aims to identify whether E-tailing companies in India analyse value chain, applying Value chain analysis in achieving and sustaining competitive advantage, and to know whether the demographic characteristics (age, educational and others) of the respondent's effect on their awareness of the importance of applying value chain analysis to achieve and sustain competitive advantage.

  1. To study how the value chain activities are performed by the e-tailers in passing on the value to the customers.

  2. To study how value chain analysis link to organization goals, strategies and objectives.

  3. To broaden management awareness about value chain analysis.

  4. To understand the value chain approach for assessing competitive advantage.

  5. To comprehend useful strategic frameworks for value chain analysis.

  6. To appreciate the organizational and managerial accounting challenges.

    Hypotheses

    The study aims to test the following hypotheses:

    [H.sub.1]: E-tailing companies in India don't analyze value chain.

    [H.sub.2]: E-tailing companies in India don't apply value chain analysis to achieve and sustain competitive advantage.

    [H.sub.3]: E-tailing companies in India don't apply value chain analysis to sustain competitive advantage.

    [H.sub.4]: There is no significant impact and influence of the respondent's demographic characteristics (age, educational level, and specialty) on their attentiveness of the prominence of applying value chain analysis to achieve and sustain competitive advantage.

    Scope of the Study

    The study is undertaken for e-tailing companies. Regional, sectorial and industry wise analysis is done to appraise the gravity and magnitude of Indian industries in general and large enterprises in Particular. The customers of the specified e-tailing companies from particular area are taken to know their perception levels.

    Research Methodology

    The study is based on a descriptive approach by surveying the preceding studies in the same area and based on the analytical approach, a questionnaire is developed to answer the study questions, and test hypotheses.

  7. Primary data: The primary data relates to opinions, perceptions and views of knowledgeable people who are either actively involved in the transactions on either side, as well as those who are interested in the issue are taken.

  8. Secondary data: The access to the data and the information for analysis is obtained in documented form and the data is predominantly secondary in nature. The main sources of information are: (i) Records of Companies (ii) Records of Industry, (iii) Books, journals, e-journals, periodicals and other published data and information.

    Data collection

    The study is made with respect to few large companies belonging to e-tailing sector which were considered after examining the company's annual reports, websites from published sources. Questionnaire is used to collect primary source of data.

    Research study's population

    The study population consists of Indian and foreign e-tailing companies which started its business operations in India and customers of those e-tailing companies.

    Study's variables

    The study aims at investigating the relationship between value chain analysis (dependent variable) and achieving and sustaining competitive advantage (independent variables).

    Methodology

    The present study even includes an explanatory and exploratory study on how Value Chain analysis is used in assessing competitive advantage of an organization and leads to Firms Strategic Competitiveness. A case study method is chosen because:

  9. It highlights the complexity of a...

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