Value chain analysis refers to a strategic analysis tool that can help a firm understand its competitive advantage. The tool helps in identifying the areas in which value to the company’s customers can be increased. More so, a company uses a value chain analysis to identify the areas where costs can be reduced while understanding in a better way the company's linkages to its customers, suppliers, and other business organizations in the industry (Blocher et al., 2019). A value chain at Fowler Farm has three phases, which include operations, upstream, and downstream. The operations phase in Fowler's Farm involves all the farming processes, such as the production of corn (Blocher et al., 2019). The upstream phase comprises the firm's linkages with its suppliers of farming tools and seeds. The downstream phase comprises the farm's linkages to its customers, including services and delivery of the dairy and all farm products.
Activities that make Fowler’s Farm Competitive
The first step in the value chain analysis is the identification of all the firm’s activities. In this step, Fowler's specific activities, which the firm must engage in during the process of developing, producing, and availing the customer service are identified. Below is a table summarizing Fowler’s Farm value chain activities,
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| Value Activity | Current Operations |
| Acquiring factors of production | Farmland, buildings, and equipment for the production of goods |
| Land preparation, Planting, Weeding, harvesting | Employees use farm equipment such as plows, discs, tractors to carry out these activities. |
| Research on the farmland to make decisions | Determines the type of soil and the suitable fertilizer for the land through experience in the farming process |
| Operates three different operating segments | These segments are tobacco, dairy farming, corn, and other crops intended for livestock feed |
| The hiring of farmhands, tax assistance, bookkeepers, mechanics | Employees are employed on a part-time and full-time basis |
| Distribution and selling of products | Products such as tobacco are sold through auction and contract at the end of the harvest. |
Evaluate the Competitive Advantage the activities Confer upon the Company
Fowler’s Farm has a competitive advantage on its factors of production. Fowler’s investment of 1,850,000 dollars on farmland offers the company a competitive advantage as its current market value is at 2,650,000 dollars, therefore, preventing new companies from entering the market. Fowler Farm has employed various employees including the farmhands, who prepare and plant various crops. The farmhands are employed on a full-time basis while other employees such as accountants are contracted on a part-time basis. The CPA contracts cost the company 15,000dollars a year, while the farmhands together with the bookkeeper earn 25,000 dollars annually. Contracting the farmhands on a full-time basis ensures they can be used at the various stages of production, which range from land production, planting, weeding, fertilizing, with a fixed salary at the end of the month. On the other hand, hiring an accountant on a part-time basis ensures that the employee is available when the need arises, thus ensuring the expenses are kept low.
Fowler's Farm operates various segments, which include tobacco, dairy farming, corn, and other crops intended for livestock feeding. Through this aspect of diversification, Fowler harvests gallons of raw milk, bushels of corn, and bushels of tobacco, which enables Jack to obtain a high net income of around 233,500 dollars. Therefore, diversification gives Fowler Farm a competitive advantage as the farm can be utilized depending on its unique characteristics. Additionally, Jack's experience in farming gives him a competitive advantage in making decisions about the fertilizing mix required for the various crops and types of soil. To sell its farm produce, Fowler's company employs the contract and auction technique. Signing a contract ensures the commitment of the buyers, thus aiding the firm in selling all its products after harvesting.
Justification of the activity, which is the most valuable for the company’s growth
In the turbulent and dynamic environment, Fowler’s Farm is continually faced with the need to increase its performance. Diversification is the strategic tool that Fowler’s Farm uses to surpass its competitors. This diversification aspect helps the company to make use of all its land, which is high, hilly, and low level. Additionally, a part of the land is humus-rich, while the rest of it is claylike. Diversification also ensures that the company gets high returns on its investments, which have greatly escalated in recent years.
Justify the Activity Choice that Could Benefit from Alteration
Three segments operations increase Fowler’s Farm profitability. This aspect ensures that the firm can explore market options that lead to the company’s growth. Additionally, diversification ensures the risk in a particular segment is minimized. Therefore, Fowler's farm can benefit more from its diversification by improving its management processes to incorporate scientific approaches in informing decisions on the best crops and livestock to keep for high returns.
Recommended Change to the Selected Activity
Currently, Jack determines the type of crops to plant on the various soil types using the rule of thumb and his experience on the farmland. Additionally, the decisions on the fertilizer mix to be used on the land depend on Jack's judgment, which is not based on science. Thus as an approach to improve the company’s competitive advantage using diversification, Fowler’s Farm needs to incorporate proper operating procedures. Scientific concepts need to be incorporated into the farming process. For instance, in determining the crops that will be suitable in a particular area, the soil characteristics need to be scientifically assessed, such as measuring the nutrients content, water holding capacity, and its PH. Thus, the farm would be more profitable if scientific crop rotation techniques and livestock management are employed.
References
Blocher, E., Stout, D., Juras, P. & Smith, S. (2019). Cost management: A strategic emphasis (8 th Ed.). MC Graw Hill Education.
