This document discusses several concepts related to business analysis: - Porter's Value Chain which evaluates the value added by each activity in a company's processes. It argues competitive advantage comes from effectively managing linkages between activities. - Porter's Five Forces model which analyzes competition within an industry based on five competitive forces. - Net Present Value (NPV) which discounts forecasted cash flows to calculate if a project is worth undertaking based on whether NPV is positive, negative, or zero. - Internal Rate of Return (IRR) which is the discount rate that makes an investment's NPV equal to zero, and can be used to evaluate mutually exclusive projects.

1. Porter’s Value Chain,
Porter’s Five Force ,
Net Present Value, and
Internal Rate of Return
by: Angga_Efriansyah

2. Hello!
I am Angga efriansyah
I am a student at Uin Suska Riau
Information System
You can find me at:
anggaefriansyah@gmail.com
Or in Instagram :
@angga_efrian
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3. Porter Value
Chain
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4. Value Chain
It evaluates which value
each particular activity adds
to the organizations products
or services.
This idea was built upon the
insight that an organization is
more than a random
compilation of machinery,
equipment, people and
money.
Only if these things are
arranged into systems
and systematic activates it
will become possible to
produce something for
which customers are willing
to pay a price.
Porter argues that the
ability to perform particular
activities and to manage
the linkages between these
activities is a source of
competitive advantage.
(Michael Porter in his book "Competitive Advantage:
Creating and Sustaining superior Performance"
(1985).
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5. Porter Original Model
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6. Primary Activities
Inbound Logistics: Here goods are received from a company's
suppliers. They are stored until they are needed on the
production/assembly line. Goods are moved around the
organization.
Operations:This is where goods are manufactured or
assembled. Individual operations could include room service
in an hotel, packing of books/videos/games by an online
retailer, or the final tune for a new car's engine.
Outbound Logistics:The goods are now finished, and they need
to be sent along the supply chain to wholesalers, retailers or
the final consumer.
Marketing and Sales: In true customer orientated fashion, at this
stage the organization prepares the offering to meet the
needs of targeted customers. This area focuses strongly
upon marketing communications and the promotions mix.
Service: This includes all areas of service such as installation,
after-sales service, complaints handling, training and so on.
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7. Support Activities
Procurement :This function is responsible for all purchasing of
goods, services and materials. The aim is to secure the lowest
possible price for purchases of the highest possible quality.
Technology Development :Technology is an important source
of competitive advantage. Companies need to innovate to reduce
costs and to protect and sustain competitive advantage. This
could include production technology, Internet marketing activities,
lean manufacturing, Customer Relationship Management (CRM),
and many other technological developments.
Human Resource Management (HRM) :Employees are an
expensive and vital resource. An organization would manage
recruitment and selection, training and development, and rewards
and remuneration.
Firm Infrastructure :This activity includes and is driven by
corporate or strategic planning. It includes the Management
Information System (MIS), and other mechanisms for planning
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8. Margin
Margin’ implies that organizations realize a profit
margin that depends on their ability to
manage the linkages between all activities in
the value chain.
organization is able to deliver a product / service
for which the customer is willing to pay more
than the sum of the costs of all activities in the
value chain.
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9. Porter’s Five
Force
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10. Porter’s Five Force
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11. Porter’s five force analysis is a
framework that attempts to analyze the
level of competition within an industry
and business startegy development by
michael E. Porter 1980 it determines
the competive. It also determines the
ultimate profit potential of the industry
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12. Net Present Value
(NPV)
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13.  Cash flows of the investment project should
are forecasted based on realistic assumptions
 Appropriate discount rate are identified to
discount the forecasted cash flows
 Present value of cash flows is calculated using
the oppurtunity cost of capital as the discount
rate
Net Present Value
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14.  Accept the project when NPV is positive NPV=0
 Reject the project when NPV is negative NPV<0
 May accept the project when NPV is zero NPV=0
NPV=C*(PVF)-i
In the above formula:
C is the cash inflow expected to be received each period
PVF is the present value factor
I is the initial investment
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15. Internal Rate of
Return
(IRR)
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16. Internal rate of return
Discount rate that makes NPV = 0
Accept if IRR > required return
Same decision as NPV with
conventional cash flows
Unreliable with:
Non-conventional cash flows
Mutually exclusive projects
MIRR = better alternative
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17. Multiples IRR
✖ Descartes Rule of Signs
✖ Polynomial of degree n→n roots
When you solve for IRR you are solving for the root of an
equation
1 real root per sign change
Rest = imaginary (i2 = -1)
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0
)IRR1(
CFn
0t
t
t




18. Thanks!
Any questions?
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