Every product purchased at the market has a certain value reflected in its price which the buyer is willing to pay. From this perspective, every business can be regarded as a process of creating a certain value of goods. Michael Porter has introduced the concept of the value chain. Full business cycle includes the creation of a product, its sale as well as the after-sales service. Each element of the chain contributes to the creation of the good’s value, but at the same time, it determines the additional value (margin) which represents the difference between the total value of goods and the cost of maintenance of this value chain. The marketing services should be performed in such a way that it would increase the customers’ interest in production. The current paper seeks to examine the way internal activities are organized as well as their relation to the strategic performance and position of such firms as Sears, Craftsman, and Wal-Mart.

To begin with, the value chain analysis identifies the corresponding factors that may add value or not. Michael Porter considered that the value chain analysis should consist of the primary and support activities (1980). To the primary usually belong SCM, operations, distributions, marketing before and after the sale service. On the other hand, the support activities include RD, information systems, HRM, finance, accounting, and firm infrastructure. The primary activities of Sears include controlled manufacturing contracts of various shops and customers with media and promotion leading to customer satisfaction. The company has a standard service for the clients. The professional marketing service is intended for the potential customers as well as for producers in order to generate customer interest. The positive outcome will definitely lead to the increase in sales, the catalogues, online channel and apps can be used as an efficient tool to develop brand loyalty. Regarding the outbound logistic, the company has more than 3900 full-line retail stores in the U.S. and Canada. The transportation of goods can be accomplished by a consumer, or purchased goods can be shipped to one of the pick-up centers. Moreover, free shipping is available for $99. Sears Holding Corporation is a leading retailer and also a part of Shop Your Way.

The support activities deal with technology maintaining a proposition of the official website with orders and feedback for customer returns. The development of transport and the automotive industry has led to the rapid development of the retail trade. In 1914, Sears has adopted the strategy of development through big chain stores as well as the modern supermarket. Currently, Sears is the largest retail chain in terms of sales; specifically, it ranks second in the USA and in the world after such huge corporation as Walmart that takes the first position. Furthermore, when Craftsman brand was created in 1926, it could reach $ 1 billion in the world market value. Craftsman products are manufactured in more than 20 factories in different countries. According to the NASDAQ Global Select Market, the company’s shares owned by non-affiliates comprises about $1.2 billion.

To illustrate, the average returns of stocks in the company comprises 5.14% for the last decade. Moreover, the average price of compensation equals 4.02 %, whereas the beta for the company is 1.01. The risk free rate is close to market rate with 1.01. An average rate of return comprises 5.24, thus showing that the stocks of the company are undervalued, and the financial gain for the potential and existing investors is higher than their minimal requirements. Sears Holding Corporation does not have hard market compensation because the standard deviation is bigger than the market, and the stocks involve more risk. Generally, the internal activities provide the power to allocate budgets for innovations; however, such innovations need appropriate introduction due to such problem as hierarchical bureaucracies.

The internal activities of the company are also related to the strategic position and performance because they can maintain strategic alignment as well as culture inside the company which are directed to support innovations. Finally, the internal market shows the evolutionary activities of natural selection but the main issue is a disruptive idea which begins to develop and flourish and becoms more interesting than the normal work of the organization. The above mentioned activities can become a threat for the rest of the organizations.

To conclude, competitive advantages cannot be understood completely if to look only at the company as a whole. The real advantage of cost minimization and differentiation must be found in the chain of actions taken by the firm to deliver a certain value to the customers. While conducting the detailed analysis and selecting the strategy, Porter has proposed to apply these aspects to the value chain. The development of big chain stores, the provision of standard services, and the promotion of communication with the customers have led to the clients’ satisfaction. In terms of sales, Sears is the second corporation after Walmart that still leads the world as regards the technological advancements, the variety of orders, and the customers’ feedback. Craftsman can also serve as a valuable example for Sears in terms of sales, manufacturing, and diversity of products. The company’s strategic position and performance significantly affects the company’s internal activity.

Gregor Brown is the author of this article. See his another post entitled why is academic writing important.