To determine the value drive from manufacture to customer level .

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