Chapter 5 – Advanced Frameworks
145
However, between then (1985) and now (2007-2008), the
world of manufacturing has changed. High-tech
manufacturers in Silicon Valley and Boston Route 128 do not
consider the logistics of manufacturing a core competency;
consequently volume manufacturing is outsourced through
contract manufacturers like Solectron to Taiwan, China,
Singapore, etc. In this changed scenario, Porter’s Value Chain
cannot be applied directly to discern value within
manufacturing organizations.
Moreover, services organizations constitute bulk of the
businesses in first world countries. For such organizations,
inbound logistics, operations, etc. have a very different
meaning, compared to manufacturing firms. However, an
analysis of the value chain for such organizations can be done
while taking strategic decisions like forward integration,
backward integration, and outsourcing. In the examples
below, software manufacturing, which is perceived more and
more as a services industry as opposed to a physical product
manufacturing industry, is used as an example.
For software firms, inbound activities include understanding
and synthesizing customer requirements prior to product
development. Software product development consists of
coding, unit testing, systems testing, and QA (quality
assurance). This is followed by product deployment / roll-out
and post-production software maintenance. Further, for
software firms, outbound / marketing & sales activities
include educating the channels on the features and benefits of
the upcoming or newly released products and services; talking
to analyst firms like Gartner, Forrester, and IDC to influence
customer decision making; creating marketing collateral such
as white papers and data sheets, providing customer support,
etc.
Analyzing the above mentioned activities which form a
company’s value chain can help the company take key make
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