Companies seek to gain an advantage over their competitors through the implementation of various strategies that are deemed to be sustainable within the company. These strategies can be either by means of lower prices or through providing essential features that substantiate higher prices. In this regard, the major competitive strategies include product differentiation, lowering costs, alliance, and focused differentiation (Laudon & Laudon, 2006).
Due to competitive forces experienced by many companies like The Smart Chips, proper value chain management (VCM) is required to ensure that the company sustains its competitive advantage. Value chain requirements management (VCRM) seeks to assure that the customer needs are prioritized and reducing the implementation and cycle time, thus cutting down the costs of operation. If Smart Chips Company does not realize the value of its microchip products, the company is deemed to fail in satisfying customer’s needs. According to Strategic Crossroads (2007), VCRM begins with a company’s strategic objective and transforms vital business and customer goals into well-defined and operable requirements that are actionable by value chain members. This process gives a well-defined horizontal integration and configuration of requirements against a conventional vertical focus. Several workshops are involved in this process, in an effort to define the target market and customers and their experiences together with their requirements.
Therefore, in managing its value chain, Smart Chips Company needs to follow the following VC requirements process so as to gain the desired competitive advantage:
- Customer market needs – the company needs to know what the customer requires without considering the cost, so as to make customer-specific chips.
- Strategic objectives – the company needs to outline its corporate objectives that are geared towards providing microchips at lower costs.
- Business requirements – the company should focus on the business objective which optimizes internal company process; these should focus Smart Chips can then be able to produce microchips as per the customer needs.
- Value chain owners – these include IT system owners, external business partners and process owners. The company should take into consideration these parties in order to make rightful decisions in production.
- Value chain business design – this requires that the value chain of the company should be in line with the business process.
- Value chain implementation – the Smart Chip should be able to implement the value chain if all the customer and business requirements have been elaborated.
In conclusion, VCM enables a company to define its business process and product development towards customer satisfaction. As a competitive advantage factor, companies like Smart Chip need to streamline their business process with proper technological procedures so as to continue gaining market share.
References
Laudon, K. C., & Laudon, J. P. (2006). Management information Systems: Managing the Digital Firm. (9th Ed). Upper Saddle River, NJ: Pearson Prentice Hall.
Strategic Crossroads. (2007). Value Chain Requirements Management (VCRM). 2009. Web.