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Referring to literature on Value Chain Management (VCM) and Supply Chain Management (SCM), effectiveness of supply chain relationships and integration of supply chain partners depends on the mode of integration in the value chain can impact a business organization in multiple ways and affect the sustainability of its competitive advantage.
The primary objective of value chain management is integration of the value chain partners leading to improvement in efficiencies and resulting in value creation to the stakeholders. the choice of value chain relationship mode e,.g. long term contract .
The factors which are important in terms of optimizing value demonstrates that stable long-term relationships and contracts of supply could not survive a phase shift in the business cycle and that the degree of integration had little bearing in sustaining the supply chain itself. Therefore there is a need to develop a suitable decision support system to facilitate choice of appropriate mode of relationship between the value chain partners. Primary to development of such a strategy matrix would be identification of the critical variables which determine the choice of mode of relationship. So the company should:
- Identify the critical variables which determine the mode of relationship between the value chain partners .
- Develop a conceptual model for decision-making on the mode of strategic relationship between the value chain partners. - Demonstrate the practical application of the model to draw the alliance strategy for the company .
