[SOUND] In module 1 and module 2, you'll become familiar with WCSC and some other situations that management faces. Additionally, you are somewhat aware of WCSC, value proposition, and some of the key activities carried out by the organization. In this model, we would like to go into a more detailed discussion of the Porter's general value chain model and how to use this model to better categorize and understand the impact of the different activities. The Porter model identified nine key activity areas that most firms engage to create, deliver and capture value. These activity areas should be aligned in such a way as it offers the customer value that exceeds the cost of executing activities, thereby resulting in a successful and great profit margin. The activities are broken down into two domains; primary activities, and support activities. Primary activities include those activities at which an organisation can use as leverage to create a sustainable competitive advantage. It includes purchasing and in-bound logistics. This relates to all those activities involving acquiring, inventorying, distributing of raw materials, anything that's used for inputs to the production process. Next, we have the production or the operations activity. This relates to all those activities of converting those inputs into finished products and services. And then we have distribution. And this relates to all those activities of getting the finished product or service into the hands of the consumer or your customers. And next, we have market sales and this relates to all activities or building a relationship between your product or service with the customer base. And finally, we have services, and this relates to all those activities involved after the initial sale, on making the product and supporting the customer experience with your product or service after they've purchased it. And the next domain area is support activities. The support activities involve those activities which supports the execution of the primary activities. This includes things like firm infrastructure. This relates to the organizational structure, the governance, controls, routines, and we have also human resource management. This relates to the hiring, the retention, the training, and compensation, and activities related to those individuals that carry out their primary activities. Next, we have technology development. This relates to all the technology that's used within an organization to support organizational activities, and this could be in regards to automation, to research and development, logistics, and many other areas. And finally, we have procurement. This relates to those activities of actually purchasing those input materials and that could include equipment, supplies, or additional services as well as many different types of materials. And the fundamental component of value chain management is analysis of these activities. The hope is to gain a good understanding of what may be these cost drivers and value drivers, and how the linkage between these activities contribute to those factors. In Module 2, we had identified those key activities. Now we would like to think about them in a context of how they may be leveraged to manage costs and to increase customer value. So let's take a closer look at an example. This figure represents the number of activities carried out by let's say company X. And so we have purchasing and parts inventory. This is probably maps to purchasing and inbound logistics. We have R&D and component manufacturing, assembly testing, and this may map to the production and operations components of the generic model. We have goods inventory. This might map to outbound activities. As well as logistics and distribution, we have the sales and marketing of course that matches to sales and marketing activities, and they will have customers support. This may map to the service component of the generic value chain. So the next question becomes, how these activities interact in such a way to impact cost, or perceived customer value and create a sustainable competitive advantage into profitability and high performance? So, having a comprehensive view of the value chain activities helps support operational decision making, identify potential misalignments between activities and strategies, its overall systematic approach to help gain a better understanding between activities carried out by an organization, and how they impact overall organizational effectiveness and efficiency. And as for next steps, to practice this learning, use the Porter value chain model to analyze the key activities identified in Module 2. Discuss how the linkages between these activities add value and allow WCSC to potentially better manage costs. Be sure to check the course site for more details regarding the activities, and thank you so much and see you soon. [SOUND]
