Our Company gets her strength by harnessing both the vertical and horizontal forces of these two chains videlicet: the value chain and supply chain. Our Company therefore integrates the difference between a value chain and a supply chain. In this regard, our Company sees the supply chain as the process of all parties involved in fulfilling a customer request, while the value chain is seen as a set of interrelated activities our Company uses to create a competitive advantage.
In principle as I have already stated, our Company is not inventing something new but we owe our achievements on the fact that has been developed by Professor Eugenio Michael Porter of Harvard University (Michael Porter, 1979-1985) and used throughout the world for nearly 30 years. Likewise, we see the value chain as our powerful tool for disaggregating our Company into its strategically relevant activities in order to focus on the sources of competitive advantage, that is, the specific activities that result in higher prices or lower costs.
Our Company’s value chain is typically part of a larger value system that includes either upstream of our Suppliers or downstream our Distribution Channels), or both. This perspective about how value is created forces our Managers to consider and see each activity not just as a cost, but as a step that has to add some increment of value to the finished product or service.
Subsequently, and wherever possible, our Company is always negotiating through the horizontal integration, whereby our Company always have the tendency of acquiring those companies doing similar business so that we develop some type of monopolistic advantage by reducing competition and increasing market share in order to develop specific economies of scale. We are always looking for better ways to strengthen our position and whenever we succeed in the acquisition process we see it as an opportunity for us to grow our market share, reduce competition and access to new customers /or consumers. Hence increasing our profitability and business success always keeping it in our mind that the market is the pie and the bigger the slice of the pie the more profit potential.
The success of our Company is always based on the three facts which are:
- Being aware that the value chain is the activities involved in delivering value to customers.
- The activities, and the overall value chain in which activities are embedded, are the basic units of competitive advantage.
- Our business strategy is reflected in the set of choices about how the activities in the value chain are configured and linked together.
All in all, through the vertical integration, our Company enters new industries to support the business model of our core industry, whereas in a horizontal integration, our Company competes in a single industry but expands through mergers, acquisitions and strategic alliances/collaborations.