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WHAT IS A VALUE CHAIN?

WHAT IS A VALUE CHAIN?. Porter defines 'value' as "the amount buyers are willing to pay for what a firm provides".

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WHAT IS A VALUE CHAIN?

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  1. WHAT IS A VALUE CHAIN? • Porter defines 'value' as "the amount buyers are willing to pay for what a firm provides". • The value chain was therefore designed to display total value and consisted of the firm's value activities (defined below) and its margin ("the difference between total value and the collective costs of performing the value activities"). • Thus, the generic value chain for a single firm comprises three main elements: its primary activities, its support activities and the margin.

  2. Dimensions of internationalisation of manufacturing firms in the apparel industry Sylvie K. Chetty, Department of Marketing, Victoria University of Wellington, New Zealand, EJM, 1999, Vol. 33 No. 1 / 2, pp. 121-142

  3. 1984 • Until 1984, when economic deregulation was introduced, New Zealand had the highest tariffs on imported manufactured goods of any Organisation of Economic Co-operation and Development (OECD) country • The government removed legislation for import licences and also brought in tariff reduction programmes; tariffs were reduced 40 per cent in 1992 to 15 per cent by 1 July 2000 in the apparel industries

  4. 1986-1993 • The market for domestically produced apparel was quickly eroded by imports from Australia, China and Fiji - imports which had the edge in novelty, price or both • During the period 1986-93, soon after deregulation, the number of small to medium-sized firms in the apparel industry almost halved (Department of Statistics, 1994) • Those firms which wanted to survive in the industry decided to export • Fortunately, the formation of Australia New Zealand Closer Economic Relations Trade Agreement (ANZERTA) in 1989 made it easier for New Zealand apparel manufacturers to enter the Australian market

  5. Operation Method • The usual process • No exporting • Local agency • Foreign agency • Foreign sales subsidiary • Foreign production

  6. Sales objects (what we sell) • As firms internationalise, they may diversify and existing product line or move into a new one • Depending upon the needs of the foreign market, new products may include services, technology, know-how

  7. Target markets (where) • At the start, firms tend to penetrate markets that are closest in physical and cultural distance • As they gain confidence, they might seek markets that are more distant

  8. Organisational capacity • Personnel • Organisational structure • Finance

  9. Other dimensions (Chetty, 1994) Dimensions • Firm characteristics • Decision-maker characteristics • Firm competencies Influnces • Operation method • Sales objects • Markets

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