Allana ppt2003

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Allana ppt2003

  1. 1. VALUE CHAIN ANALYSIS <ul><ul><li>A tool developed by Mr. Michael Porter in his book “Competitive Advantage” </li></ul></ul><ul><ul><li>1980 </li></ul></ul>
  2. 2. VALUE CHAIN ANALYSIS <ul><li>Is a linked set of value-creating activities that begin with basic raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product or service, and ending with distributors getting the final goods into the hands of the ultimate consumer. </li></ul>
  3. 3. INDUSTRY VALUE CHAIN ANALYSIS <ul><li>TWO SEGMENTS: </li></ul><ul><ul><ul><li>UPSTREAM </li></ul></ul></ul><ul><ul><ul><li>DOWNSTREAM </li></ul></ul></ul>
  4. 4. INDUSTRY VALUE CHAIN ANALYSIS <ul><li>An industry can be analyzed in terms of profit margin available at any point along the value chain. </li></ul><ul><li>In analyzing the complete value chain of a product, note that even if a firm operates up and down the entire industry chain, it usually has an area of expertise where its primary activities lie. </li></ul><ul><li>A company’s center of gravity is the part of the chain that is most important to the company and the point where its greatest expertise and capabilities lie – its core competencies. </li></ul>
  5. 5. INDUSTRY VALUE CHAIN ANALYSIS <ul><li>According to Galbraith, a company's center of gravity is usually the point at which the company started. </li></ul><ul><li>After a firm successfully establishes itself at this point by obtaining a competitive advantage, one of its first strategic technique is to move forward or backward along the value chain in order to reduce cost or to guarantee distribution. This process, called vertical integration. </li></ul>
  6. 6. CORPORATE VALUE CHAIN ANALYSIS
  7. 7. CORPORATE VALUE CHAIN ANALYSIS <ul><li>Each of a company's product lines has its own distinctive value chain. Because most corporations make several different products or services, an internal analysis of the firm involves analyzing a series of different value chains. </li></ul>
  8. 8. CORPORATE VALUE CHAIN ANALYSIS <ul><li>The systematic examination of individual value activities can lead to a better understanding of a corporations strengths and weaknesses. According to Porter, “differences among competitor value chains are key source of competitive advantage” </li></ul>
  9. 9. CORPORATE VALUE CHAIN ANALYSIS <ul><li>It involves the following three steps: </li></ul><ul><li>1. Examine each product line’s value chain in terms of the various activities involved in producing that product or service. </li></ul><ul><li>2. Examine the “linkages” within each product line’s value chain. </li></ul><ul><li>3. Examine the potential synergies among the value chains of different product line or business units. </li></ul>

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