Nvidia Value Chain Analysis
Nvidia value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the business. Specifically, business leaders can create competitive advantage through dividing the business into various activities and analysing each activity individually from value creation perspective.
Figure below illustrates the essence of Nvidia value chain analysis.
Primary Activities in Nvidia Value Chain Analysis
Nvidia Inbound logistics
Nvidia inbound logistics involves managing the supply chain of components and raw materials into the premises of its contract manufacturers. The multinational technology company performs quality checks of semiconductors and other spare parts using test equipment purchased from industry-leading suppliers such as Advantest America Inc.
Nvidia benefits from the economies of scale in inbound logistics activities due to the large amount of spare parts and components it purchases. Furthermore, the company has strategic relationships with its key suppliers in place and these relationships play an instrumental role in new product development.
Nvidia Operations
Nvidia employs fabless manufacturing strategy. It employs third party companies outside of United States for all phases of the manufacturing process, including wafer fabrication, assembly, testing, and packaging.[1] Nvidia does not engage in any of these activities directly and chooses to focus the design, marketing and distribution of its products.
The company works with world-class manufacturers to produce its products. Semiconductor wafers are produced by leading companies such as Taiwan Semiconductor Manufacturing Company Limited and Samsung Electronics Co. Ltd, adapter card products and switch systems are produced by the likes of Flex Ltd., Jabil Inc., and Universal Scientific Industrial Co., Ltd. and Fabrinet manufactures Nvidia cables.
Assembly, testing and packaging of products and platforms are done by Amkor Technology, King Yuan Electronics Co., Ltd., Omni Logistics, LLC, Siliconware Precision Industries Company Ltd., Wistron Corporation and other companies within the same level. Fabless manufacturing strategy allows Nvidia to focus on its core competency, that is designing and developing innovative products.
Nvidia Outbound Logistics
Nvidia outbound logistics involves warehousing and distribution of ready goods. Potential areas for value creation in outbound logistics involve delivering to consumers directly without intermediaries, using advanced information and communication technologies, sharing distribution costs with adjacent businesses and others.
Nvidia uses third-party companies to collect ready items from the facilities of its producers to the warehouses of its distributors and re-sellers. The multinational technology company also sells to end-users through its website directly. For this sales channel Nvidia also uses third parties to procure ready products from its producer facilities to its own warehouses.
Nvidia Marketing and Sales
Marketing and sales as a primary activity involve the development and implementation of marketing strategy to increase revenues. Nvidia marketing communication messages focus on unique selling proposition of the brand. Specifically, the software and fables company attempts to associate its brand image with advanced features and capabilities and superior quality. The company also uses the channel marketing utilising its channel partners and original equipment manufacturers to pass through the marketing message to end-users.
Nvidia Service
Service primary element in value chain analysis relates to the level of customer support Nvidia offers its end-users after the sales. The company has more than 50 offices worldwide with customer service desks. Nvidia maintains a dedicated customer service portal on its website where customers can get help with their Nvidia products and services, as well as, contact sales representative about other products. Furthermore, the company has a Partner Locator feature on its website, where customers can find Nvidia partners to purchase from and subsequently these partners are expected to offer superior customer services.
Nvidia Corporation Report contains a full version of Nvidia value chain analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Ansoff Matrix and McKinsey 7S Model on Nvidia. Moreover, the report contains analyses of Nvidia leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of Nvidia marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Annual Review 2022, Nvidia Corporation