| dc.description.abstract | The value chain framework is an approach for breaking down the sequence (chain) of
business functions into the strategically relevant activities through which utility is added
to products and services. Value chain analysis is undertaken in order to understand the
behavior of costs and the sources of differentiation (Shank & Govindarajan, 1993)/ In the
banking fraternity, differentiation is achieved by creating a perception among targeted
customers that the services offered as a whole are unique in some important way, usually
by being of higher quality. The appeal of differentiation is strong for banking institutions,
for which image and the perception of quality are important. This perception allows the
institution to charge higher service fees, and so to outperform the competition in revenues
without reducing costs significantly.
To survive in today's highly competitive business environment, any organization must
achieve, at least temporarily, a competitive advantage. A low cost/price strategy focuses
on providing goods or services at a lower cost than the competition, or superior goods or
services at an equal cost. In banking, it might be accomplished by limiting service
offerings, by reducing the complexity of the service delivery process, or by limiting
service support. This strategy requires as well a tight cost-control system, benefiting from
economies of scale in production and experience curve effects. | en |
