Answer to Question #257047 in Management for Bros

Question

Discuss the theory of value chain model and resource based model in relation to strategic choice and selection.

Answer 1

 A value chain is a set of activities that an organization carries out to create value for its customers. A value chain model describes the full range of activities needed to create a product or service. The purpose of a value-chain analysis is to increase production efficiency so that a company can deliver maximum value for the least possible cost.

Resource-based theory suggests that resources that are valuable, rare, difficult to imitate, and non-substitutable best position a firm for long-term success. These strategic resources can provide the foundation to develop strong capabilities that can lead to superior performance over time.

The value chain approach targets business processes as drivers of customer value and competitive differentiation. The resource-based view on the other hand focuses on the firm's collective assets and experiences as drivers of economic performance and competitive market advantage.