National Community Reinvestment Coalition 2012High-Revenue Positions in Value Chains               Leonard Greenhalgh, PhD...
What business has    high revenue potential?•   Growing industry•   Central value chain position•   Ability to deliver val...
Are you in a growth industry?• Automotive    • Housing
Are you in a growth industry?• Automotive       • Housing• Geriatric care   • IT staffing
Are you in a growth industry?•   Automotive     •   Housing•   IT staffing    •   Geriatric care•   Giveaways      •   Gre...
Even if you’re in a growth industry:Are you in a good part of the value chain?   • What is your place in the value chain? ...
How do you fit into the value chain? Raw            Components Assembly   Distribution   After    End-UseMaterials        ...
Who is taking the profits in the value chain?HighLevel  ofProfitLow          Raw                     Components Assembly  ...
Who is taking the profits in the value chain?HighLevel  ofProfitLow          Raw                     Components Assembly  ...
An entrepreneur’s mission statement that limits his value-chain position“We train sewage-treatment facility employeesto op...
Needs      Design      Build       Train     Operate    MaintainAssessment Treatment   Treatment   Workers   Facility   An...
Needs      Design      Build       Train     Operate    MaintainAssessment Treatment   Treatment   Workers   Facility   An...
Another Entrepreneur’sLimiting Mission Statement“We provide high-quality  janitorial services”
Workspace                         Rent or   Building   Clean      Determine Repair      Tenant Needs       Locations      ...
Strategic growth:     Occupying more of the value chainWorkspace                         Rent or   Building   Clean      D...
Strategic growth:      Leveraging strategic relationshipsWorkspace                         Rent or   Building   Clean     ...
Think about the sustainable agriculture              value chain     Do you need to understand it?
Can you grow into areas ofgreater long-term opportunity?    Avoid having blinders on: Consider your core competencies
What are their  core competencies?• Amazon.com and eBay?
What are their   core competencies?• Amazon.com and eBay?• Wal-Mart and The Gap?
What are their   core competencies?• Amazon.com and eBay?• Wal-Mart and The Gap?• PayPal and American Express?
What are the core competencies          of a small     hotel/motel owner?
What are your core       competencies?Are they applicable to business opportunities that will make        more money?
Even in a high-revenue business… You must not “put all your eggs in one basket”
All products, services andcustomers have a life cycle                              TIME
Why a portfolio?       It’s better from a cash-flow perspective  +CashFlow                                              TI...
A portfolio allows you to grow and be resilient+(-)
You lead with your value proposition   • Do it better      – Lower-cost, higher-quality, superior delivery,        more-fl...
Operations strategy falls into four            categoriesOperationalexcellenceQualityCostDeliveryFlexibility
Operations strategy depends on        key customer needsOperational   Wal-MartexcellenceQualityCostDeliveryFlexibility
Operations strategy depends on          customer needsOperational   Wal-MartexcellenceQuality          3Cost             1...
Operations strategy depends on          customer needsOperational   Wal-Mart   Red CrossexcellenceQuality          3Cost  ...
Operations strategy depends on          customer needsOperational   Wal-Mart    Red CrossexcellenceQuality          3     ...
Operations strategy depends on          customer needs  Operational      School  excellence    constructionQualityCostDeli...
Operations strategy depends on          customer needs  Operational      School  excellence    constructionQuality        ...
Operations strategy depends on          customer needs  Operational      School      Luxury home  excellence    constructi...
Operations strategy depends on          customer needs  Operational      School      Luxury home  excellence    constructi...
Operations strategy depends on        key customer needsOperational   Emergencyexcellence    DepartmentQualityCostDelivery...
Operations strategy depends on        key customer needsOperational   Emergencyexcellence    DepartmentQuality            ...
Operations strategy depends on        key customer needsOperational   Emergency    Methadoneexcellence    Department   Cli...
Operations strategy depends on        key customer needsOperational   Emergency    Methadoneexcellence    Department   Cli...
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Leonard Greenhalgh | Examining the Value Chain

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Leonard Greenhalgh | Examining the Value Chain

  1. 1. National Community Reinvestment Coalition 2012High-Revenue Positions in Value Chains Leonard Greenhalgh, PhD Professor, and Faculty Director, MWBE Programs, Tuck School of Business at Dartmouth
  2. 2. What business has high revenue potential?• Growing industry• Central value chain position• Ability to deliver value• Portfolio
  3. 3. Are you in a growth industry?• Automotive • Housing
  4. 4. Are you in a growth industry?• Automotive • Housing• Geriatric care • IT staffing
  5. 5. Are you in a growth industry?• Automotive • Housing• IT staffing • Geriatric care• Giveaways • Green solutions
  6. 6. Even if you’re in a growth industry:Are you in a good part of the value chain? • What is your place in the value chain? • What actual value is being added? • Are you getting your share of total value-chain revenue? • Can someone take over your position?
  7. 7. How do you fit into the value chain? Raw Components Assembly Distribution After End-UseMaterials Market Customer
  8. 8. Who is taking the profits in the value chain?HighLevel ofProfitLow Raw Components Assembly Distribution After End-Use Materials Market Customer
  9. 9. Who is taking the profits in the value chain?HighLevel ofProfitLow Raw Components Assembly Distribution After End-Use Materials Market Customer
  10. 10. An entrepreneur’s mission statement that limits his value-chain position“We train sewage-treatment facility employeesto operate the local water treatment plants”
  11. 11. Needs Design Build Train Operate MaintainAssessment Treatment Treatment Workers Facility And Upgrade Facility Plant Facility
  12. 12. Needs Design Build Train Operate MaintainAssessment Treatment Treatment Workers Facility And Upgrade Facility Plant Facility
  13. 13. Another Entrepreneur’sLimiting Mission Statement“We provide high-quality janitorial services”
  14. 14. Workspace Rent or Building Clean Determine Repair Tenant Needs Locations Build Mgmt. Premises Maintenance and ServesAssessment Needs Refurbish Customers
  15. 15. Strategic growth: Occupying more of the value chainWorkspace Rent or Building Clean Determine Repair Tenant Needs Locations Build Mgmt. Premises Maintenance And IsAssessment Needs Refurbish Customer • Strategy is to grow in scope and to move into higher-profit domains
  16. 16. Strategic growth: Leveraging strategic relationshipsWorkspace Rent or Building Clean Determine Repair Tenant Needs Locations Build Mgmt. Premises Maintenance And IsAssessment Needs Refurbish Customer • Strategy is to grow in scale and scope— through strategic business relationships
  17. 17. Think about the sustainable agriculture value chain Do you need to understand it?
  18. 18. Can you grow into areas ofgreater long-term opportunity? Avoid having blinders on: Consider your core competencies
  19. 19. What are their core competencies?• Amazon.com and eBay?
  20. 20. What are their core competencies?• Amazon.com and eBay?• Wal-Mart and The Gap?
  21. 21. What are their core competencies?• Amazon.com and eBay?• Wal-Mart and The Gap?• PayPal and American Express?
  22. 22. What are the core competencies of a small hotel/motel owner?
  23. 23. What are your core competencies?Are they applicable to business opportunities that will make more money?
  24. 24. Even in a high-revenue business… You must not “put all your eggs in one basket”
  25. 25. All products, services andcustomers have a life cycle TIME
  26. 26. Why a portfolio? It’s better from a cash-flow perspective +CashFlow TIME BREAKEVEN (-)
  27. 27. A portfolio allows you to grow and be resilient+(-)
  28. 28. You lead with your value proposition • Do it better – Lower-cost, higher-quality, superior delivery, more-flexible, etc. – Operational excellence strategy • Do it differently – Segment, target, and position; or innovate – Differentiation strategy • Gain customer loyalty – Repeat vs. conquest purchasers – Customer relationship management strategy
  29. 29. Operations strategy falls into four categoriesOperationalexcellenceQualityCostDeliveryFlexibility
  30. 30. Operations strategy depends on key customer needsOperational Wal-MartexcellenceQualityCostDeliveryFlexibility
  31. 31. Operations strategy depends on customer needsOperational Wal-MartexcellenceQuality 3Cost 1Delivery 2Flexibility 4
  32. 32. Operations strategy depends on customer needsOperational Wal-Mart Red CrossexcellenceQuality 3Cost 1Delivery 2Flexibility 4
  33. 33. Operations strategy depends on customer needsOperational Wal-Mart Red CrossexcellenceQuality 3 3Cost 1 4Delivery 2 2Flexibility 4 1
  34. 34. Operations strategy depends on customer needs Operational School excellence constructionQualityCostDeliveryFlexibility
  35. 35. Operations strategy depends on customer needs Operational School excellence constructionQuality 3Cost 2Delivery 1Flexibility 4
  36. 36. Operations strategy depends on customer needs Operational School Luxury home excellence construction constructionQuality 3Cost 2Delivery 1Flexibility 4
  37. 37. Operations strategy depends on customer needs Operational School Luxury home excellence construction constructionQuality 3 1Cost 2 4Delivery 1 3Flexibility 4 2
  38. 38. Operations strategy depends on key customer needsOperational Emergencyexcellence DepartmentQualityCostDeliveryFlexibility
  39. 39. Operations strategy depends on key customer needsOperational Emergencyexcellence DepartmentQuality 4Cost 3Delivery 2Flexibility 1
  40. 40. Operations strategy depends on key customer needsOperational Emergency Methadoneexcellence Department ClinicQuality 4Cost 3Delivery 2Flexibility 1
  41. 41. Operations strategy depends on key customer needsOperational Emergency Methadoneexcellence Department ClinicQuality 4 3Cost 3 2Delivery 2 1Flexibility 1 4

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