Value Chain in an Organization

Value Chain in an Organization


A company’s value chain is one thing that should be handled with care. This is because it because it contributes a lot towards the success of an organization.  According to Thompson (2001), each of the value chain components has a role to play in adding value to the company. Research and development is one of the things that can be used to add value to a company. Research and development can be used to come up with information or designs of products and services which are capable of making the company gain from customer increased attraction. The product and service design process can be used to come up with designs which are capable of attracting more customers. The design process can be used to come up with products and services which are able to attract new customers. The production process can be used to come up with things on time and within the specifications set out. The production should be used in a way which ensures that the market is well served. This means that the production process can add value through avoiding deficits as well as keeping the laid standards alive. The marketing process can be done in a way which keeps the company’s products and services on top of the rest in the market. The distribution process can be used to add value through ensuring that the products and services in the market do not run out. The distribution process can also be made to be reliable so as to generate more value for the company. Customer service is the other value chain components that can add value to a company if well utilized. The customer service environment can be organized in a way which creates customer satisfaction. With customer satisfaction, customers are always willing to use the company’s products or services, thus paving way for value addition in an organization (Porter, 2008)


I think the research and development function of the value chain is most important. This is because this function is capable of determining the way the other functions are to be handled. The research and development process will come up with information on the best way to do Product and service process design, Production, Marketing, Distribution and Customer service. Therefore, if anything goes wrong in research and development, most probably the other functions will be messed up.

Accounting information is very useful in the value chain. This is because it helps in raising important questions which help in decision making (Wetherly & Otter, 2008). In research and development, the accounting information that would be used in decision making is the sales amounts. This is because the questions raised on the basis of sales for the company will be able to determine the areas to be researched on so that the sales levels may increase. The sales and cost of production accounting information will be very useful in making product and service design decisions. In the production function, the cost of goods sold or production costs will be very useful in decision making. The marketing expenses and sales amounts will be very useful in making decisions related to marketing. The distribution costs will be very useful in making decisions related to distribution function of the company. Lastly, the sales as well as customer service costs will be able to guide the management in making decisions related to customer service function of the value chain of a company.

The questions that can be answered by the accounting information in the company include,

  • How much material is used in production?
  • How many vehicles are should be used in distribution?
  • How many customer service employees should the company retain?
  • How many marketing executives should the company have?
  • How many product designs should the company have in the next financial year?



Porter, M. (2008). Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster.

Thompson, L. (2001). Understanding corporate strategy. London: Thomson Learning.

Wetherly & Otter (2008). The business environment. Oxford: Oxford University Press.




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