Value and Cost ANALYSISBy- Sundeep Mohanty.                                                                               ...
generating more revenue and it will create sustainable culture which can be visible and respected bymarket and customers. ...
iv.     Employee education to meet the need: Investing on education employees with                business need reduces co...
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Value Chart And Porter Five Force Model

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Business road map in defining Organizational value in global market

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Value Chart And Porter Five Force Model

  1. 1. Value and Cost ANALYSISBy- Sundeep Mohanty. New Entrants Profit Margin Reduce Cost to increase profit M Brand Creation and Sustainability Cost Market Supply R n Unsalable Products/Service Cost M D Increase value to Fixed Suppliers/Vendors Cost a Customer Cost r Q reduce cost and increase profit T Marketing, Support g IT and Products and R Sales and and Resp. n production Relationship Services i Center Market D n Demand Cost Substitute Market at Products Equilibrium Here I tried to mash up “Value chart” and “porter’s five force model” and blend it to reflect how to create Organizational value to increase profit in global market. This analysis is the further extension to my previous documents where I discussed “Four Square Analysis” which explained how we should evaluate our products, services and evaluating our Organization through SWOT analysis and SCDQ model (BCG model). The other document “decoding the triangles” where I tried to establish and explain different Organizational relationships. The simple principle for a business to be sustainable and be market leader is- Increase value, reduce cost, first meet need then exceed expectation and develop effective future leaders. Value: Creating and sustaining Organization value- Organizations values are like human character, it is more or less reflective through the action, through the services delivered to customers, the products you sale to customers. Depending on Organizational value, you will be more recognizable, you will be followed (market and customers will make you leader), increase customers loyalty base, it will help 1
  2. 2. generating more revenue and it will create sustainable culture which can be visible and respected bymarket and customers. Below are examples of different types of values: 1. Profitability: Exon Mobile, Apple, Microsoft, JPMorgan Chase, etc. 2. Innovative: Apple, Google, Facebook, Walt Disney, etc. 3. Social and community involvement: Target, Toms Shoes, Whole Foods, BEN & JERRYS, etc. 4. High culture: Google, Starbucks, Zappos, etc. 5. Durability: Toyota, GE, Anheuser-Busch, etc. 6. Global reach: Wal-Mart, BP, Royal Dutch Shell, Citi Bank, etc.Reduce Cost: Cost reduction is an art. Organizational Leadership plays very important role in defining andcontrolling cost. In most cases, companies seriously think about cost reduction when they see badsituation, it may be for global economic situation or reduction in client base or over spending orunplanned expenditures. Most organization does cost reduction as part of reacting to the situation andthe Organizations faces this situation because they lag in taking proactive preventive measure.Following are the few options to reduce cost by taking proactive preventive measure: i. Reduce repetitive activities: Track repetitive activities within the team, group, departments within the Organization and repetitive work by business partners. This situation mostly happens when there is no definitive direction on work assignment. Though companies should encourage in knowledge sharing, they should focus on defining guideline on roles and responsibility very clearly. I feel repetitive work is one of the main reason of confusion and delay in process. Reducing repetitive work may save 15% to 20% departmental budget. ii. Vendor Management: I compare Organizations with less experience in vendor management are like giving glass of milk in the hand of an infant- though milk is good for health, still the infant will drop most of the milk. Outsourcing is good- It reduces cost and increases product/service value. If the outsourcing vendors not managed and coordinated properly, it will increase cost, create confusion and ultimately will reduce Organizational value. iii. Need-What-Don’t know: This is one of the other key factors of spending money without cause. Organizations lags proper market analysis, does not understand what customer need, based on some internet search and seeing what others doing jumps into competition. Now business itself not clear about what they need, but they ask other groups to start working on concept which no one understands, ultimately the product ends of with failure or immature and increases expenses. In other cases departments purchases products that they don’t know when they are going to user, without any strategic planning in this direction, they spends money in buying the product but they don’t use the product, later finally when they get ready for the product, the product gets outdated. 2
  3. 3. iv. Employee education to meet the need: Investing on education employees with business need reduces cost and at the same times keeps the employees ready to compete with market forces. v. Healthy work culture: Better the work culture, happier are the employees and hence increases productivity, which reduces cost.Preparing future leaders: This is one of the important aspects of maintaining Organizational sustainability and maintainingOrganizations value in market. Prepare next in-line leaders to carry forward the good initiatives and tomake previous initiatives even better. Other deciding factors to increase value and profit to increase Organizational sustainability are: Relationship- Keeping good relationship with various partners, vendors and customers are veryimportant, it will help serving the customer better. Better relationship will also increase customerloyalty. Look out for Game changers- Most of the times new entrepreneur who joins the marketcompetition are the game changers and not the big established Organizations. In some cases, bigOrganizations gets benefited by entrepreneurial Organizations, Big Organizations quickly analyses thefuture benefits of such innovative Organizations and they acquires the Organization to take advantageof the innovative products. Compete with your own products/services: It sounds strange, but this is the fact, if you will notimprove your own products/services and replace with new innovative products and services thensomeone else will replace your product and services with new innovative or cost effective product. So tocontinue dominating market with your products and services it is better you to take initiative and createnew benchmark. 3

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