it-e-29 Value Chains in E-commerce

In e-commerce, a number of business process and activities go unnoticed by the consumer

and are often taken for granted. With an online merchant's business, value-added activities work

together to make the business-to-consumer interface operational.

In 1985 Michael Porter wrote a book called Competitive Advantage, in which he introduced

the concept of the value chain. Businesses receive raw materials as input, add value to them

through various processes, and sell the finished product as output to customers.

[1]Competitive advantage is achieved when an organization links the activities in its value

chain more cheaply and more effectively than its competitors. For example, the purchasing function

assists the production activity to ensure that raw materials and other supplies are available on time

and meet the requirements of the products to be manufactured. The manufacturing function, in turn,

has the responsibility to produce quality products that the sales staff can depend on. The human

resource function must hire, retain, and develop the right personnel to ensure continuity in

manufacturing, sale, and other areas of the business. Bringing in qualified people contributes to

stability, continuity, and integrity of operations throughout the firm.

[2]There is no time sequence or special sequence of activities before a business is considered

successful or effective. The idea is to link different activities in such a way that the value-added

(output) of one activity (department, process, etc.) contributes to the input of another activity.

The integration of these activities results in an organization fine-tuned for profitability and


According to Porter, the primary activities of a business are:

Inbound logistics. These are procurement activities vendor selection, comparative shopping,

negotiating supply contracts, and just-in-time arrival of goods. They represent the supply side of

the business. In e-commerce, the business must be capable of exchanging data with suppliers

quickly, regardless of the electronic format.

Operations. This is the actual conversion of raw materials received into finished products. It

includes fabrication, assembly, testing, and packaging the product. This production activity

provides added value for the marketing function. Operational activities are the point in the value

chain where the value is added. These happen in the back-office where the pizza is baked, the

PCs are assembled, or the stock trades are executed. Data are shared at maximum network speed

among internal and external partners involved in the value-adding processes.

Outbound logistics. This activity represents the actual storing, distributing, and shipping of

the final product. It involves warehousing, materials handling, shipping, and timely delivery to

the ultimate retailer or customer. The output of this activity ties in directly with marketing and


Marketing and sales. This activity deals with the ultimate customer. It includes advertising,

product promotion, sales management, identifying the product's customer base, and distribution

channels. The output of this activity could trigger increased production, more advertising, etc.

Service. This activity focuses on after-sale service to the customer. It includes testing,

maintenance, repairs, warranty work, and replacement parts. The output of this activity means

satisfied customers, improved image of the product and the business, and potential for increased

production, sale, etc.

Primary activities are not enough. A business unit needs support activities to make sure the

primary activities are carried out. Imagine, for example, a manufacturing concerns with no

people or with poorly skilled employees.

The key support activities in the value chain are:

Corporate infrastructure. This activity is the backbone of the business unit. It includes general

management, accounting, finance, planning, and legal services. It is most often pictured in an

organization chart showing the relationship among the different positions, the communication

network, and the authority structure. Obviously, each position holder must add value to those above

as well as below.

Human resources. This is the unique activity of matching the right people to the job. It

involves recruitment, retention, career path development, compensation, training and development,

and benefits administration. The output of this activity affects virtually every other activity in the


Technology development. This activity adds value in the way it improves the product and

the business processes in the primary activities. The output of this activity contributes to the

product quality, integrity, and reliability, which make life easier for the sales force and for

customer relations.

Procurement. This activity focuses on the purchasing function and how well it ensures the

availability of quality raw material for production.

Where does e-commerce fit in? The value chain is a useful way of looking at a corporation's

activities and how the various activities add value to other activities and to the company in


[3]E-commerce can play a key role in reducing costs, improving product quality and

integrity, promoting a loyal customer base, and creating a quick and efficient way of selling

products and services. By examining the elements of the value chain, corporate executives can

look at ways of incorporating information technology and telecommunications to improve the

overall productivity of the firm. Companies that do their homework early and well ensure

themselves a competitive advantage in the marketplace.



1, fine-tune  ['faintju:n]

vt. 调整;使有规则;对进行微调


2, profitability  [,prɔfitə'biliti]

n. 收益性,利益率


3, fabrication  [,fæbri'keiʃən]

n. 制造,建造,虚构的谎言


4, ultimate  ['ʌltimit]

n. 终极,根本

a. 终极的,根本的,极限的,最后的

5, compensation  [kɔmpen'seiʃən]

n. 补偿,赔偿

6, recruitment  [ri'kru:tmənt]

n. 征募新兵, 补充

7, retention  [ri'tenʃən]

n. 保存(保持力,包装牢固,记忆力,保留物)

8, loyal  ['lɔiəl]

a. 忠诚的,忠心的

ad. 忠诚地,忠实地

n. 忠贞,忠诚,忠实

Total views.

© 2013 - 2023. All rights reserved.

Powered by Hydejack v6.6.1