Value Chain Analysis And Its Application

With the strengthening trend of economic centralization and globalization, modern enterprises will face intenser competition. The pressure they endure from competitors, suppliers, customers, potential competitors and substitutes will also be bigger and bigger. Therefore, the traditional methods of business administration haven't met requirements of enterprises. Due to this problem, Value Chain Analysis (VGA) method is put forward. It has been 16 years since the concept of value chain was put forward, as a method of modern enterprises management. Though VGA method is widely used in foreign countries these years, it hasn't been applied in our country.In the view of the external aspect of enterprises, VGA helps them make decisions concerning with situations of industry. In the view of internal aspect of enterprises, this method makes enterprises consider the contributions of every activity from a new way, including functions, cost, value, and contributions for improving strengths of activities.The paper firstly introduces the concept and connotation of value chain, the processes and the application realms of VGA. On the basis of introduction, a case is provided to further explain the application processes of VGA in a manufacturing firm, including activities identification, value chain construction, activities function and cost identification, activities value calculation, activities analysis and VGA. Moreover the emphasis and innovation of this paper is that the case introduces not only the result of VGA but also the detailed processes of VGA. At the end of the paper, some problems and solutions are discussed and the further development of VGA is analyzed.