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Value Chain Analysis
Presentation by Group A:
Abhishek, Pankaj, Raj, Rohitashw, Sahil
Presented to Prof. Siddharth Bose
Value Chain Analysis as a Strategic Management Tool 2
Learning Outcomes
• Awareness of Value Chain Analysis (VCA)
• Align VCA to goals, strategies & objectives
• Assessing competitive advantage through VCA
• Applying VCA through strategic frameworks
Value Chain Analysis as a Strategic Management Tool 3
What’s Value Chain?
“internal processes or activities
to design, produce, market,
deliver and support the
product”
History of the company,
strategy and its
implementation and the
economics of the activities
C
u
s
t
o
m
e
r
V
a
l
u
e
Primary Activities
Support Activities
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
Inbound &
Outbound
Logistics
Opera
tions
Marke
ting &
Sales
Service
Value Chain Analysis as a Strategic Management Tool 4
Special slide – Today’s Value Chain
Firm Infrastructure
Human Resources Management
Technology Development
R&D Supply
Chain
Marketing
& Branding
Sales
Firm Infrastructure
Human Resources Management
Technology Development
Procurement
Inbound &
Outbound
Logistics
Opera
tions
Marketing
& Sales
Service
Primary Activities
Support Activities
Primary Activities
Support Activities
Old perception Modern perception
Value Chain Analysis as a Strategic Management Tool 5
Why Value Chain Analysis?
Identify
Core
Competence
Recognise
Competitive
Advantage
Impetus on
Forward or
Backward
integration
Value Chain Analysis as a Strategic Management Tool 6
Examples of VCA and its output (1)
Filling Transport Retail Customers
• Make
Container
on site
• Tetra Pak
specialized
equipment
• No reefer
vehicles
• No space in
filling &
Packaging
• Low store
handling
• Less space
required
• Longer
shelf life
• Easy access
Value Chain Analysis as a Strategic Management Tool 7
Examples of VCA and its output (2)
Value
Chain
IKEA’s Choice
Design Simple, high quality, low cost
Parts Standard, Common size, Global
Assly By the customer
Stock Computerized network
Mktg Scandinavian Image
Display Focus on design and not pieces
Value Chain Analysis as a Strategic Management Tool 8
Assessing Competitive
Advantage
Value Chain Analysis as a Strategic Management Tool 9
The three tiers of VCA
Internal Cost
Analysis
Internal
Differentiati
on Analysis
Vertical
Linkages
Analysis
Value Chain Analysis as a Strategic Management Tool 10
Internal Cost Analysis
Cost Factors
Why costs differ?
Why swings in profitability?
Efficiencies and inefficiencies
Competitor’s costs
Nature and source of
advantage
Value Chain Analysis as a Strategic Management Tool 11
Internal Differentiation Analysis
Identify Value Creating
Processes
Evaluate differentiation
strategies
Determine the best
sustainable points of
differentiation
Value Chain Analysis as a Strategic Management Tool 12
Vertical Linkage Analysis
Align industry value chain
to resources that create
value
Diagnose the cost drivers
for each value-creating
process
Determine Opportunities
for sustainable competitive
advantage
Value Chain Analysis as a Strategic Management Tool 13
Strategic Framework
for VCA
Value Chain Analysis as a Strategic Management Tool 14
Industry Analysis
Intensity of
competition
Bargaining
power of
suppliers
Threat of
new
entrants
Threat of
substitute
Bargaining
power of
buyers
Customer concentration
Cost of switching suppliers
The no. of alternative
suppliers
Uniqueness of service;
Power Balance
Substitute Performance
Cost of change
Cost of advantage
Rate of profit may fall
COMPETITION
Quality differences
Cost of leaving market
Value Chain Analysis as a Strategic Management Tool 15
Core Competence Analysis (CCA)
• Superior integration of technological, physical and human
resources
• Can it be leveraged?
• Does it enhance customer value?
• Can it be imitated?
Hard to
Imitate
Focused on
End-userScalable
Value Chain Analysis as a Strategic Management Tool 16
Segment Analysis
Segmentation
Matrix
Analyze
Segment
attractiveness
Identify
Segment
variables
Identify key
factors for
each segment
Analyze broad
and narrow
segment scope
Product lines, Type of customer
Channels of distribution and
region/geography
Evaluate Profitability
Consider Interrelationship
among segments
Quality, delivery, customer
satisfaction, market share,
profitability
ROI as a measure of success
Matching of a firm’s
resources with the market
Sharing costs
Value Chain Analysis as a Strategic Management Tool 17
Segmentation Matrix
Value Chain Analysis as a Strategic Management Tool 18
Generic Strategies
Relative
Differentiation
Position
Relative cost Advantage
Value Chain Analysis as a Strategic Management Tool 19
Limitations
• Oriented towards manufacturing business
• Few experts to use it
• Lack of information available
• Less of strategic impact
Value Chain Analysis as a Strategic Management Tool 20
Challenges
• Bring the importance of customer value to the forefront of
managements
• Designing internal and external information systems
• Adequate information system
• Requires expertise in internal operations and information
• Cooperation of all managers

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Value chain analysis

  • 1. Value Chain Analysis Presentation by Group A: Abhishek, Pankaj, Raj, Rohitashw, Sahil Presented to Prof. Siddharth Bose
  • 2. Value Chain Analysis as a Strategic Management Tool 2 Learning Outcomes • Awareness of Value Chain Analysis (VCA) • Align VCA to goals, strategies & objectives • Assessing competitive advantage through VCA • Applying VCA through strategic frameworks
  • 3. Value Chain Analysis as a Strategic Management Tool 3 What’s Value Chain? “internal processes or activities to design, produce, market, deliver and support the product” History of the company, strategy and its implementation and the economics of the activities C u s t o m e r V a l u e Primary Activities Support Activities Firm Infrastructure Human Resources Management Technology Development Procurement Inbound & Outbound Logistics Opera tions Marke ting & Sales Service
  • 4. Value Chain Analysis as a Strategic Management Tool 4 Special slide – Today’s Value Chain Firm Infrastructure Human Resources Management Technology Development R&D Supply Chain Marketing & Branding Sales Firm Infrastructure Human Resources Management Technology Development Procurement Inbound & Outbound Logistics Opera tions Marketing & Sales Service Primary Activities Support Activities Primary Activities Support Activities Old perception Modern perception
  • 5. Value Chain Analysis as a Strategic Management Tool 5 Why Value Chain Analysis? Identify Core Competence Recognise Competitive Advantage Impetus on Forward or Backward integration
  • 6. Value Chain Analysis as a Strategic Management Tool 6 Examples of VCA and its output (1) Filling Transport Retail Customers • Make Container on site • Tetra Pak specialized equipment • No reefer vehicles • No space in filling & Packaging • Low store handling • Less space required • Longer shelf life • Easy access
  • 7. Value Chain Analysis as a Strategic Management Tool 7 Examples of VCA and its output (2) Value Chain IKEA’s Choice Design Simple, high quality, low cost Parts Standard, Common size, Global Assly By the customer Stock Computerized network Mktg Scandinavian Image Display Focus on design and not pieces
  • 8. Value Chain Analysis as a Strategic Management Tool 8 Assessing Competitive Advantage
  • 9. Value Chain Analysis as a Strategic Management Tool 9 The three tiers of VCA Internal Cost Analysis Internal Differentiati on Analysis Vertical Linkages Analysis
  • 10. Value Chain Analysis as a Strategic Management Tool 10 Internal Cost Analysis Cost Factors Why costs differ? Why swings in profitability? Efficiencies and inefficiencies Competitor’s costs Nature and source of advantage
  • 11. Value Chain Analysis as a Strategic Management Tool 11 Internal Differentiation Analysis Identify Value Creating Processes Evaluate differentiation strategies Determine the best sustainable points of differentiation
  • 12. Value Chain Analysis as a Strategic Management Tool 12 Vertical Linkage Analysis Align industry value chain to resources that create value Diagnose the cost drivers for each value-creating process Determine Opportunities for sustainable competitive advantage
  • 13. Value Chain Analysis as a Strategic Management Tool 13 Strategic Framework for VCA
  • 14. Value Chain Analysis as a Strategic Management Tool 14 Industry Analysis Intensity of competition Bargaining power of suppliers Threat of new entrants Threat of substitute Bargaining power of buyers Customer concentration Cost of switching suppliers The no. of alternative suppliers Uniqueness of service; Power Balance Substitute Performance Cost of change Cost of advantage Rate of profit may fall COMPETITION Quality differences Cost of leaving market
  • 15. Value Chain Analysis as a Strategic Management Tool 15 Core Competence Analysis (CCA) • Superior integration of technological, physical and human resources • Can it be leveraged? • Does it enhance customer value? • Can it be imitated? Hard to Imitate Focused on End-userScalable
  • 16. Value Chain Analysis as a Strategic Management Tool 16 Segment Analysis Segmentation Matrix Analyze Segment attractiveness Identify Segment variables Identify key factors for each segment Analyze broad and narrow segment scope Product lines, Type of customer Channels of distribution and region/geography Evaluate Profitability Consider Interrelationship among segments Quality, delivery, customer satisfaction, market share, profitability ROI as a measure of success Matching of a firm’s resources with the market Sharing costs
  • 17. Value Chain Analysis as a Strategic Management Tool 17 Segmentation Matrix
  • 18. Value Chain Analysis as a Strategic Management Tool 18 Generic Strategies Relative Differentiation Position Relative cost Advantage
  • 19. Value Chain Analysis as a Strategic Management Tool 19 Limitations • Oriented towards manufacturing business • Few experts to use it • Lack of information available • Less of strategic impact
  • 20. Value Chain Analysis as a Strategic Management Tool 20 Challenges • Bring the importance of customer value to the forefront of managements • Designing internal and external information systems • Adequate information system • Requires expertise in internal operations and information • Cooperation of all managers