Spotify Value Chain Analysis
The internal Spotify value chain analysis helps to deal with weaknesses inside its huge dataset. So, it appears ideal for improvement and helps perceive the value chain concept as an example.
A value chain analysis refers to identifying a firm's primary and support activities. It helps the corporation to improve its functionality and add value to the finished goods. For that reason, we can say that a value chain analysis can help make your business perfect for customers. Consumers won't be getting your service if they get a problematic product that does not serve the purpose. A value chain analysis ensures that the internal activities transform basic inputs into advantageous outputs.
On top of that, keeping track of your structural activities will help reduce the overall cost of the product. With better dealing techniques and ideal production strategies, you can save the cost on general and advanced procedures. Michael E. Porter was the first to introduce value chain analysis. Therefore, we also refer to it as a porter value chain framework. Furthermore, the analytic report helps you take control of the business and improve the flow of finance, information, and raw products inside the corporation. To understand all these benefits better, we try to judge them practically through an example. It will depict what is a value chain and how it affects the corporation's improvement rate. Therefore, we came up with a general Spotify value chain (Analysis) report that will clear all your confusion in a snap.
2. Background of Spotify
Before jumping into the Spotify value chain analytic report, it is better to know the fundamental basis of the company. Because Spotify hasn't been around for long, the amount of fame and users it collected is pretty astonishing. It all started in 2006 when Daniel Ek founded this platform as a media service station. Moreover, the service was available for users when it got launched in 2008.
In simple words, Spotify is an audio streaming platform based in Swedish. At this instant, it has crossed the 433 million monthly users' mark. Out of these, 188 million are subscribers that pay Spotify for their services. According to 2021 statistics, its revenue has crossed €9.668 billion. Right now, its regional availability exposure has reached the maximum level. 180+ countries have access to its service, which keeps increasing with every year. Besides that, the corporation is an active partner of various brands and organisations, such as Microsoft, FC Barcelona, Netflix, And ESPN.
3. Spotify Value Chain Analysis
Like any other analytics report, Spotify's value chain analysis is also based on Porter's strategic value chain guidelines. Therefore, ideally, the corporation does not give equal importance to every activity in the process. Some need extra precision, and Spotify's value chain helps the controllers to direct their attention toward relevant issues.
Being an exponentially large firm, its value chain analytic report is divided into two separate activities.
- Primary Activities
- Support Activities
We'll discuss their sub-elements and their impacts on the corporation in depth below.
These activities have a direct impact on goods production. On top of that, it actively helps to sell the product to appropriate customers in the target zone. As the name suggests, it primarily affects the firm's improvement, performance, and success in a market. Certain sub-activities come under its reign-discussed as follows.
- Inbound Logistics
- Outbound Logistics
- Marketing And Sales
For physical goods-producing firms, this term generally refers to the purchase of goods. Yet, for Spotify, things have taken a significant turn. It includes storing digital inputs and getting the raw materials in digital and physical shape. Plus, the internal division of raw digital data to components for creation also comes under it. Long story short, inbound logistics is the name of receiving, distributing and storing the product. Without its analysis, the firm can face certain problems in digital product development.
Once the raw material is in hand for production, the first step is to process that material. That's where the operational activity starts. It is an organised way of generating products for the users. This ideal and basic procedural creation can help upsurge your constant economic growth. Operations can help you maximise profitability and customer trust. Plus, they expose competitive improvement opportunities for the manufacturers that enhance performance and reduce cost.
These activities refer to shipping the product to the customer in an effective and ideal way. While transportation, a corporation's product passes through diverse intermediaries. Outbound logistic analytic reports help to lower its damage rate and enhance customer loyalty. It starts from handling and goes all the way to delivery of data while passing through storage, schedules, order processing strategies, and transportation. Therefore, we can say outbound logistics can help you grow your business through customer satisfaction.
A good business only flourishes if it inspires enough customers to purchase the goods. Still, it isn't as easy as it seems. Therefore, IKEA uses these value analysis charts to minimize any mistakes during the marketing process.
On top of that, it helps them portray their products in the best way that tempts customers to buy. IKEA uses different means of marketing advertisement. For instance, digital media, sales promotional seminars, and events.
Spotify's value chain not only gives a pre-sale but a pre-sale servicing feature as well. It assists the customers to a great extent and takes the customer-controller relationship to the next level with after-sale guidelines. It uses customer feedback to minimise every possible digital error inside the business app and web copies. Plus, an ideal service experience is another playful way to positive product marketing.
Support activities help the corporation to assist the normal functioning of primary activities. It is an effective way to ensure proper facilitation and coordination between departments and business management. On top of that, Spotify manages and analyses its support activities to minimise unintentional damage to its brand reputation. We'll discuss its sub-components below to help you understand the entire framework's report.
- Firm Infrastructure
- Human Resources
- Technology Development
The infrastructure includes planning, financial development, strategic organisation, and accounting. Collectively, these procedures help retain a reasonable portion of the market for a corporation. Therefore, an effective infrastructure can help you get priority in the competition. Besides that, the structural framework of any organisation is the most important part of its value chain as it optimises the actual importance of that analytic report.
Human resources are the most important reservoirs of potential success for any corporation. A trained and satisfied employee works far better and provides great value for the firm. Therefore, Spotify value chain uses rewarding and training programs to manage employee performance addition to that, personal management activity can motivate employees and release work pressure. Plus, hiring talented and value-yielding employees also comes under the effective resource management of Spotify.
Spotify came up in an advanced era. So, it does not has many traditional activities that need changing. However, with time things keep changing, and so does the technological approach of Spotify. Spotify is inducing technological development in production, marketing, and transport. Moreover, the company is starting to use automated systems, technology-oriented support services, and improved data analytics.
Procurement refers to purchasing every possible value-adding complement of the corporation. It includes purchasing machinery, equipment, supplies, or any other input. This support activity assists in inbound logistics, operations, and outbound logistics. However, it affects their improvement rate. Therefore, the controller must pay great attention to the corporation's procurement.
4. How to Do a Value Chain Analysis in EdrawMax
Now that you know what a value chain analysis is, you may ask how to do a value chain analysis myself. It won't be difficult if you have enough information and a proper program for the process. However, without an appropriate program, prepare to sit for hours before a computer screen, practising the traditional techniques. EdrawMax is one of the experts-suggested programs that can help you do value chart analysis through a presentable visualisation. Follow the steps to get your value chart analysis report in a snap.
- Step 1: Find the competitive data sources of your corporation and collect every activity-related data that you can find. Without enough data, your analysis chart will be of no use. Now download the EdrawMax program and log into it by creating an account.
- Step 2: Once you are in the home interface, click and navigate to New>Business>Strategy and planning. Select the basic layout of value chain analysis to start from scratch. However, you can choose a pre-made template from the "Templates" bar in the left section of the home screen to skip the time and get your analytic report instantly.
- Step 3: Once your layout is organised, insert the informational text inside related shapes. If you use a ready-made template, drag the shapes to the appropriate places by simple click and hold motion.
- Step 4: Customize the template as you find it fit. There is a massive room for customisation in EdrawMax. You can change pretty much everything. Plus, it lets you add, remove, and replace components from storage.
- Step 5: Once satisfied with the report, export the file by clicking "File" and then "Save As". Moreover, you can publish your project by clicking the "Publish" button on the top right and naming it accordingly.
5. Key Takeaways
Value chain analysis is the reason why some corporations are working better than others. It helps the firms to improve the vulnerable aspects that may damage their reputation and convert them into value-yielding notions for them and their customers. Doing a value chain analysis isn't difficult if you know what you are doing.
The best way to understand it is through an example like the Spotify value chain analysis discussed in the article. To create one, try to use proper visualisation software like EdrawMax Online that gives you a hassle-free experience with a user-friendly interface. Plus, the program is universal because of its easy handling and diver export format control, making it ideal for everyone. Try it yourself and get your corporation's value chain analysis report in minutes.
Byrne, t., 2022. Value Chain Analysis Of Spotify Technology S A., [online]. Essay48. Available at: https://www.essay48.com/value-chain-analysis/15464-Spotify-Technology-S-A-Value-Chain-Analysis (Accessed 15 September 2022).
Pratap, A., 2022. Spotify Porter's Five Forces Analysis., [online] notesmatic. Available at: https://www.notesmatic.com/spotify-porters-five-forces-analysis/ (Accessed: 15 September 2022).