Michael Porter is another faculty member at the Harvard Business School. His work is the foundation of how businesses develop and manage competition and strategy. Porter's framework suggests two choices for a business in selecting a strategy. The first choice is between competing as the cost leader or based on product differentiation. Many of the techniques in the course clearly support a company competing as a cost leader. ABC and value-added analysis focus more on product differentiation. In adopting a differentiation strategy, the company develops a product that is unique from the customer's point of view. The second choice a company makes is between competing for the entire market or a niche market.
The discussion of value-added activities is on pages 164 and 165.
What are value-added processes? How do you determine if a process adds value? How does identifying value-added processes help a company run more efficiently and effectively?