Vulcan Materials Company Value Chain Analysis (2023)

1.1 Advantages of performing a Vulcan Materials Company Value Chain Analysis

Vulcan Materials Company's value chain analysis can offer several advantages:

1.1.1 Identify sources of competitive advantage

By conducting Vulcan Materials Company's value chain analysis during the planning process, potential sources of competitive advantage can be identified. The firm/enterprise is a collection of different activities that share a relationship to some extent. Vulcan Materials Company cannot market all activities in the foreign market. The Value Chain approach suggests that a company can consider these activities as sources of economic income. These activities can also act as barriers to new entrants or cause cost disadvantages for competitors.

1.1.2 Identify complex interrelationships and interdependencies

Vulcan Materials Company can identify various internal and external linkages between activities through a value chain lens. Internal links are interrelationships between activities within the same organizational units, and external links are between business units within the same or different companies. Studying these interrelationships can help a company benefit from joint coordination and optimization.

1.1.3 Improve the flow of materials, information and finance

Using Value Chain Analysis can optimize finance, products, and information flow.

• The improved flow of information can help the company identify and exploit new opportunities and mitigate external threats. Ongoing Value Chain assessment can result in timely filling of important gaps that can affect a company's productivity.
• Effective implementation of Vulcan Materials Company's Value Chain Analysis can improve the flow of materials and products due to better forecasting of demand and sales. Inventory management is also improved as Vulcan Materials Company is able to minimize delays by tracking activities throughout the supply chain.
• Modern customers attach great importance to quick response and convenient access to important product-related information. Unexpected interruption in the flow of information can affect the customer-supplier relationship. Vulcan Materials Company's value chain analysis and implementation can highlight and eliminate bottlenecks in the flow of information.

1.1.4 Formulate effective company-specific strategies

Vulcan Materials Company's value chain analysis can be used in the strategic competitive decision-making process. However, choosing the right competitive strategy (cost leadership, differentiation or focus) requires knowledge of one's own cost structure and that of rivals.

1.2 Challenges associated with Vulcan Materials Company's value chain analysis

• The company can lose its overview and strategy by splitting operations into different activities.
• The division of operations into primary and support activities may not be separable due to increased complexity.
• The splitting process can be time consuming and finding the necessary information can be difficult as well.
• Effective value chain implementation requires not just familiarity, but detailed experience.
• Vulcan Materials Company may have difficulty obtaining the necessary information if its business information system is not structured accordingly.

2. Porter's Value Chain Analysis of Vulcan Materials Company

Porter's value chain model is very popular in the business world. However, Vulcan Materials Company should not take it as a rigid and independent structure, giving equal importance to all activities. Effective value chain analysis requires Vulcan Materials Company to realize that all activities or roles do not require the same level of scrutiny. Therefore, the first step in adapting Porter's value chain framework is to identify the importance of activities according to their role in the product/service delivery process. 🇧🇷

Here is Porter's list of primary value chain activities:

2.1 Primary activities

Vulcan Materials Company's main value chain activities are directly involved in producing and selling the product to target customers. Analysis of primary value chain activities can improve Vulcan Materials Company's performance, as explained below.

2.1.1 Inbound logistics

It is important to develop strong relationships with suppliers, as their support is needed to receive, store and distribute the product. Without looking at inbound logistics, Vulcan Materials Company can face several challenges in the product development stages. Inbound logistics analysis requires a company to focus on all aspects of transformation, from raw material to finished product. Some examples of internal logistics are the recovery of raw materials, the storage of inputs and the internal distribution of raw materials and components to start production.

2.1.2 Operations

The importance of analyzing operational activities increases when the raw material arrives and Vulcan Materials Company is ready to process the raw material into the final product and release it to market. Some examples of operational activities are machining, packaging, assembly and testing. Equipment repair and maintenance also fall into this category.

Includes manufacturing and service operations. The analysis of operational activities is important to improve productivity, maximize efficiency and ensure the competitive success of Vulcan Materials Company. Increased productivity can help Vulcan Materials Company achieve steady economic growth, increase profitability and establish a solid foundation for competitive advantage.

2.1.3 Outbound Logistics

Outbound logistics includes activities that deliver the product to the customer through different intermediaries. Some outbound logistics activities are material handling, warehousing, scheduling, order processing, transportation, and destination delivery. Vulcan Materials Company can analyze and optimize outbound logistics to explore sources of competitive advantage and achieve your business growth goals.

Because when outbound activities are managed in a timely manner with optimized costs and product delivery processes have a minimal negative effect on quality, customer satisfaction is maximized and opportunities for business growth are increased. Vulcan Materials Company must give special importance to its outbound value chain activities when the products it offers are perishable and require fast delivery to the end customer.

2.1.4 Marketing and Sales

In this step, Vulcan Materials Company will highlight the benefits and differentiating points of the products offered to persuade customers that their offer is better than the competition. Just producing a high quality product at affordable costs and with differentiated features cannot create value until Vulcan Materials Company invests in marketing and sales activities. Sales agents and marketers play an important role here.

Examples of Vulcan Materials Company's sales and marketing activities include: sales force, advertising, promotional activities, pricing, channel selection, quoting, and building relationships with channel members. The company can use the marketing funnel approach to structure its marketing and sales activities. Marketing strategies can be push or pull in nature, depending on Vulcan Materials Company's business objectives, brand image, competitive dynamics and current market position.

Effective and wisely integrated marketing activities can build Vulcan Materials Company's brand equity and help it stand out from the competition. However, Vulcan Materials Company must avoid making false promises about product features that the production department cannot fulfill. Indicates the need to ensure coordination between the different activities in the value chain.

2.1.5 Services

The pre-sales and after-sales services offered by Vulcan Materials Company will play an important role in developing customer loyalty. Modern customers consider after-sales services as important as promotional and marketing activities. Negative e-WOM power due to poor support service cannot be undermined in today's technologically advanced era. The company should review its support activities to avoid damage to brand reputation and instead use it as a tool to spread positive word of mouth due to fast, timely and efficient support services.

2.2 Secondary Activities

Support activities play an important role in coordinating and facilitating activities in the primary value chain. Vulcan Materials Company can also benefit from reviewing their support activities as explained below.

2.2.1 Company infrastructure

Corporate infrastructure denotes a range of activities such as quality management, legal affairs management, accounting, finance, planning and strategic management. Effective infrastructure management can enable Vulcan Materials Company to optimize value across the entire value chain. Vulcan Materials Company can control infrastructure activities (or commonly called overhead costs) to strengthen competitive positioning in the market.

2.2.2 Human resource management

Vulcan Materials Company can analyze human resource management by evaluating different aspects of human resources, including recruiting, selecting, training, rewarding, performance management and other personnel management activities. Effective human resource management can allow Vulcan Materials Company to reduce competitive pressure based on the motivation, commitment and skills of its workforce. The company can also achieve its cost minimization objectives by analyzing hiring and training costs with their relative profitability. Vulcan Materials Company's heavy reliance on employee talent will increase the importance of this value chain support activity.

2.2.3 Technological development

In a modern and technologically advanced era, almost all activities in the value chain depend on technological support. Technological integration in production, distribution, marketing and human resources activities requires Vulcan Materials Company to realize the importance of technological development. It can be divided into activities of technological development of products and processes. Some examples are: automation software, technology-supported customer service, product design research, and data analysis. Vulcan Materials Company's research and development department falls into this category.

2.2.4 Acquisitions

Acquisition in the value chain denotes the processes involved in the purchase of inputs that can range from equipment, machinery, raw materials, inputs, raw materials and other elements necessary to produce the finished product. Due to its linkage with various value chain activities, Vulcan Materials Company must carefully consider its procurement activities to optimize the input, operation and output value chain.

As mentioned above, applying Porter's value chain model depends on understanding the importance of all activities. After understanding the relative importance of the identified value chain activities, Vulcan Materials Company should highlight areas where value can be added, profitability achieved, a base of differentiation established or processes optimized.

Here is a pictorial presentation of Porter's value chain model:

3. Competitive Advantages through Vulcan Materials Company Value Chain Analysis

It is important that Vulcan Materials Company base its competitive advantage on activities in which it has access to few or scarce resources. It may include intellectual capital, assets, skills or a distribution network. Value chain analysis can help Vulcan Materials Company identify these activities and develop these areas to gain a strong competitive advantage over rivals. There are many examples (such as Toshiba and Sharp) that see value chain analysis as a tool to gain competitive advantage and invest heavily in research and development activities within their value chain. Porter's generic strategies for gaining competitive advantage and the value chain model can be used together to establish a solid foundation of competitive advantage.

The following diagram shows Porter's model of competitive advantage:

Analysis of value chain activities can be performed to understand sources of competitive advantage. Vulcan Materials Company may use operations, marketing and other relevant value chain activities to gain economic advantage, or it may use human resources, technology, infrastructure and services. or other relevant activities to establish a strong basis of differentiation. Generally speaking, the sources of competitive advantage can be grouped into two types: cost and differentiation. Vulcan Materials Company can gain competitive advantage from either or both sources, depending on the depth and breadth of its value chain analysis. The following parts of the article detail how Vulcan Materials Company can configure primary and/or secondary value chain activities to achieve desired cost and differentiation objectives.

4. Vulcan Materials Company cost advantage

4.1 Cost advantage through Vulcan Materials Company value chain analysis

Vulcan Materials Company can take advantage of cost advantages by reducing costs associated with value chain activities. However, it requires the company to first map the activities and then associate the costs to make the necessary adjustments. The connection between the value chain and cost leadership strategy reflects a parallel focus on low-cost operating activities. If Vulcan Materials Company is to gain a cost advantage, it must identify that each element within the value chain can be optimized to achieve full effect.

• An example of value chain analysis for Vulcan Materials Company is that you can use the analysis as a tool to negotiate the best prices and maximize inbound and outbound transportation processes.
• Another example of value chain analysis is using value chain information to make a modest advertising budget that can reduce marketing costs and offer the product at an affordable cost.

If Vulcan Materials Company is looking for low cost, value chain analysis can optimize profitability. If product differentiation is Vulcan Materials Company's goal, value chain analysis will help the company maximize efficiency and improve product quality through process improvement.

4.2 Vulcan Materials Company Value Chain Analysis Cost Drivers

Vulcan Materials Company can control the following drivers to add value, establish a foundation of differentiation and improve efficiency.

• organizational policies
• Integration
• Time
• Scale economy
• links
• interrelations
• usability
• Learn and Pour

However, it is important to note that costs can only be reduced to a certain extent. Vulcan Materials Company's value chain analysis should also consider the value perceived by customers that can justify the higher price charged by the company in relation to competitors.

5. Company differentiation advantage

Vulcan Materials Company can gain the advantage of differentiation by looking at different activities in the value chain. For example, a company may purchase unique and valuable inputs that are not readily available to competitors. Vulcan Materials Company can reconfigure the entire value chain or change individual entities to establish the basis for differentiation. Cost drivers (such as timing, interrelationships, linkages, scalability, and integration) can also be modified to develop uniqueness.

Some examples of differentiation through value chain analysis are:

• Forward integration or backward integration to exert better control over inputs
• Use of new distribution channels
• Implementation of innovative process technologies.

5.1 Differentiation through primary value chain activities

Vulcan Materials Company can individually analyze the core activities of all aspects and create a basis for differentiation by identifying the following sources:

• Inbound Logistics: Possible bases of differentiation for Vulcan Materials Company are:
  • Acquire high quality inputs to offer a high quality finished product
  • Effective handling of input inputs to reduce damage
• Operations: Possible bases of differentiation for Vulcan Materials Company are:
  • flexible manufacturing system
  • Wide range of products
  • Improved product appearance
  • Preventing premature product failure
  • Quick response to unique specifications
  • Increased customer satisfaction through lower defect rate
  • Improved product performance due to compliance with technical specifications
• Outbound logistics: the possible bases of differentiation for Vulcan Materials Company are:
  • Efficient handling and better shipping to reduce product damage
  • Punctual product delivery
  • Flexible delivery capabilities
  • Effective order processing procedure
• Marketing and sales: the possible bases of differentiation for Vulcan Materials Company are:
  • Better relationship with suppliers and customers.
  • Improve communication with customers by providing high-quality information.
  • Brand awareness, reputation and image development due to extensive and effective advertising.
  • Effective coordination between product, research and marketing departments.
  • Increased sales force coverage.
• Services: the possible bases of differentiation of Vulcan Materials Company are:
  • Top quality of service
  • High quality technical support.
  • Reliable and fast repair/maintenance service

5.2 Differentiation through secondary value chain activities

Vulcan Materials Company can also analyze activities in the secondary value chain to establish a basis for differentiation:

• Company Infrastructure: Vulcan Materials Company can establish a foundation of differentiation through:
  • Extensive database development for effective marketing
  • Advanced information system to obtain more detailed information about customers.
• Human Resource Management: Vulcan Materials Company can establish a foundation of differentiation through:
  • Attractive rewards to spark creativity and maximize productivity
  • Staff training for effective interaction and superior customer service
• Technological Development: Vulcan Materials Company can establish a foundation of differentiation through:
  • Rapid development of new products
  • Integration of innovation into product design.
  • Innovative product features with patented technology
• Acquisitions: Vulcan Materials Company can establish a foundation of differentiation through:
  • Reliable shipping to ensure fast delivery
  • Purchase high-quality raw materials and spare parts.

6. Example of value chain analysis

Vulcan Materials Company's value chain analysis can be better understood with the help of some examples.

• By using value chain analysis, Vulcan Materials Company is able to select and source high quality raw materials and build customer loyalty based on that. You can also use value chain analysis to develop brand identity.
  • Starbucks provides a good example of value chain analysis. The organization has created a strong brand identity and established a solid foundation of competitive advantage through aggressive marketing and strengthening coordination between marketing and product development departments.
• Vulcan Materials Company can also gain competitive differentiation by streamlining the delivery of products offered to end customers.
  • Pizza Hut provides another successful example of value chain analysis where the organization outperformed the competition by reconfiguring value chain activities to ensure rapid delivery.
• Vulcan Materials Company can also use Value Chain Analysis to improve its HR practices.
  • FedEx is a good example of value chain analysis to understand how Vulcan Materials Company can gain a competitive advantage by analyzing its human resources activities.
  • FedEx has emphasized its value chain support activities, invested heavily in employee development, carried out excellent HR initiatives and made visible infrastructure improvements, resulting in a visible increase in brand loyalty and market share.
• Vulcan Materials Company can analyze value chain activities to reduce costs, find better supplier deals and offer high quality products at affordable prices.
  • Walmart provides a relevant example of value chain analysis that continually analyzes its value chain activities to remain innovative, minimize operating costs, and offer low-cost yet reliable services.
• Vulcan Materials Company can analyze support value chain activities to provide superior customer support. You can also analyze operational activities to expand your presence in geographically dispersed areas.
  • It can be understood with the help of another value chain analysis example. Starbucks attaches great importance to analyzing value chain activities and has successfully opened direct stores in more than 50 countries.
• Vulcan Materials Company can also use value chain analysis as a tool to perform reverse integration. This can be done by merging or purchasing suppliers to ensure timely availability of raw materials.
  • Apple provides an example of relevant value chain analysis in this regard. The company is known for its efficient value chain and successful control of products and parts.
• Vulcan Materials Company can also perform value chain analyzes to maximize operational efficiency, reduce waste and integrate sustainability into business operations.
  • Intel is a good example of value chain analysis that has reduced waste and negative environmental impact by analyzing its operational value chain activities. The company received recognition for its waste reduction efforts.
• Vulcan Materials Company can learn from value chain practices at Dow AgroSciences. Dow used value chain analysis to explore unique marketing opportunities and extract value from the generic commodity market. The company has also been using the Value Chain to manage risks at different stages of the product lifecycle.

The examples mentioned above show how Vulcan Materials Company can benefit from carrying out a detailed value chain analysis. However, it is also important to note that the application of Porter's value chain model depends on the unique contextual variables that must be considered when assigning weight to the primary. and secondary activities of the value chain.