Value chain analysis is an important tool that companies use to analyze their internal activities. It plays an active role in identifying the strengths and weaknesses of an organization. It achieves such objective by identifying most valuable resources and which ones needs adjustment to enhance competitive advantage. Cost analysis and differentiation advantage are some ways to identify strengths and weaknesses (Harrison, 2018). The cost of production from the point or raw material can be reduced. When one cost is reduced the total output will be at a lower price. From that aspect, a weakness can be identified from what increases the cost of production. Differentiation advantage helps to identify the activities which produces the most value to an organization. As such, more effort is injected to such activities to increase more value. Those with little value addition can be identified as a weakness thus rectified.
Harrison K. (2018). What Is a Value Chain Analysis? Business News Daily. Retrieved on October 10, 2018 from https://www.businessnewsdaily.com/5678-value-chain-analysis.html