A firm's value chain is divided into two major activities: primary and secondary activities. Primary activities are those activities that end with the physical creation of the product, its sale and transfer to the buyers. On the other hand, support activities are the activities that ensure that primary activities are accomplished (Tiwana, 2017). At Wells Fargo, primary activities include the development of products, maintenance of customer relationships, processing of transactions and marketing. Support activities include risk management, compliance, financial analysis, human resource management, and technology deployment (Modjtabai, 2017).
How the Firm Could Lower Costs on the Value Chain
Firms can use information technology to reduce costs in each discrete step of the value chain by emphasizing on operational effectiveness (Tiwana, 2017). Wells Fargo can reduce costs by ensuring that fewer customers visit the banking hall to make business transitions. Despite its success in automation, many services are still offered in the banking halls (Modjtabai, 2017). The company can leverage on its IT capabilities to provide secure access to banking services (such as mortgage applications) on digital platforms that are preferred by their customers. Such approach can reduce costs of loan processing. Increased offerings on mobile platforms can also reduce the cost offering advisory services and cost related to bank transactions. Moreover, the firm can fu introduce video banking services to enable customers communicate with staff outside working hours because many customers still feel that talking to employees in person offers better solutions than making enquiries on the bank's online platforms.
How to Increase value-added in any Stage in the Value Chain
Value-addition entails offering of products or services that are likely to make buyers pay more than what they would pay archrivals. With the new tools of the Internet of Things (IoT) and Industry 4.0, Wells Fargo can design products that serve end users better than rivals. With the advent of smart technologies, company products can be connected with the organization's quality management systems to monitor their performance in the real-world (Porter & Heppelmann, 2015).Wells Fargo has tested the application of chatbot technology in handling customer issues. The chatbot creates a robot-driven interface between the bank and the customers. As the technology develops, it can be used to provide unmatched customer service at any given the time of the day (Morgan, 2017). This is likely to create more convenience for customers than archrivals.
How Wells Fargo can reconfigure the Linkages between the Steps of its Value Chain
The firm can use IT tools to transform the linkages between the steps of a value chain by improving coordination in its value chain. Coordination across steps of the firm's value chain can be interconnected through IT systems to ensure that different departments share information on the real-time basis for the benefit of the organization. Through the use of smart technologies sharing of information between departments such as accounting, budgeting, product development and quality control would enable the firm to put up synchronized systems that assess the needs of customers and devise solutions in real-time (Morgan, 2017). Such coordination is likely to result in a significant drop of costs while increasing customer experience.
In conclusion, Wells Fargo stands to deliver value more than its archrivals through innovation. Innovation reduces costs by enhancing efficiency and effectiveness in the value chain. Digitization of functions such as loan application is further expected to boost Wells Fargo's standing in the financial services sector. As IoT develops, Wells Fargo appears to have set one foot ahead of the rest with the introduction of the chatbot. This is expected to create exceptional customer service platform unparalleled by other players in the industry. As a consequence of this development, it is likely to deliver more value than its archrivals.
Modjtabai, A. (2017, May 11). Payments, virtual solutions, and innovation. Retrieved from https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/innovation-presentation.pdf
Morgan, B. (2017, August 1). Chatbots 101: building a Chatbot for business with Wells Fargo. Forbes.
Porter, M., & Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 10, 96-114.
Tiwana, A. (2017). IT strategy for non-IT managers: becoming an engaged contributor to corporate IT decisions. MIT Press.
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