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VALUE CHAIN ANALYSIS
Every firm is a collection of activities that are executed to design, generate, market, deliver and support its products or services. Value chain analysis is a systematic way of examining all activities that a firm performs and how they interact.
The value chain disaggregates the firm into strategically separable activities in order to understand the behavior of costs so as to create competitive advantage. A firm creates competitive benefits by:
Carrying costs of inventory These are costs incurred because the firm has decided to maintain inventories. They generally consist of: • Stock-out costs • Insurance co
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