Value Chain Analysis Research Paper Example | Topics and Well Written Essays - 500 words

Value Chain Analysis - Research Paper Example Organizations identify strategic advantages and disadvantages with the help of value chain analysis. Value chain refers to all the value-creating functions required for creating and delivering the goods and services to the target customers. Value chain analysis is an important tool for strategic cost management which is an important part of the management accounting. According to Porter, in value chain cost management methodology first the value chain need to be identified, and then the cost, asset and revenue need to be assigned to the value activities (Hoque, 2005). Value chain analysis involves organizations internal cost analysis, its internal differentiation analysis and vertical linkage analysis. Porters value chain model is represented below. Wal Mart, one of the largest organizations in the world not only in retail sector but among the entire private as well as public sector organizations. Wal Mart, founded by Sam Walton in 1962, started its operation in 1969; it is one of the largest organizations in terms of number of employees and revenue. There are almost 1.3 million employees working in Wal-Mart. According to estimates, there are 3400 Wal Mart stores in America till 31st January, 2007. Company is one of the most important drivers of US economy. It is further proven by the fact that every week there is almost 120 million people shop in Wal Mart. As far as sales is concerned Wal Mart is far ahead of its three major global competitors namely Carrefour (France), Home Depot (United States), and Metro (Germany). Cost management is one of the basic things in management accounting. Strategic cost management results to improved strategic performance and significant transformational change in organizational value chain. Cost management information is crucial for four important management functions, which are 1) strategic management, 2) control in management and operations, 3) planning and decision making and finally