Components of Commercial Value Chain
February 12, 2025
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In today’s digital age information technology and information systems play an important role in success of organization. Information technology has challenged the way the business gets conducted. A company with superior product and service content become market leaders. There is a constant urge for the companies to provide a better and competitive content.
Organizations invest in research and development for superior content production, or they acquire/merge with companies. The purpose of acquisition is to either expand current product offering or add content as to provide end to end solutions.
Organization strategy can be devised using Porter’s Five Force model. Organization’s strategy should be to increase customer base and provide customized solution. Service also plays an important role in organization strategy. Service is the key factor in maintaining good customer relationship. Organization needs to devise a strategy which is convergence of technology, brand marketing, product innovation and world-class service.
A physical value chain consist procurement of raw materials, operations, delivery, sales and marketing and service. Information technology has changed the way we look at the value chain. Information technology has introduced concept of virtual value chain.
The components of a virtual value chain are as follows:
The concept of a virtual value chain was devised looking at current internet penetration. It provides addition to existing value chain. Information technology helps in holistic view of physical value and making it efficient and effective.
Today’s information systems are capable of capturing information from every part of the value chain. This information is utilized to optimize performance at each stage. However, this information can also be utilized to improve customer experience at each stage. This enhanced experience can be through new product and services, thus generating more revenue to the company.
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