slide deck on Value Chain Analysis

2. The real strategic question isn’t how well you are
doing today, but how you are doing against your
competitors.
Vijay Tandon on Value Chain Analysis @ UBS.
Prof. Vijay Tandon
Director - PGDM/PGCM
Universal Business School
Subject - Strategic Management
Topic - Value Chain Analysis
The greatest mistake managers make when evaluating
their resources is failing to assess them relative to
competitors.

3. Value chain
“PRIMARY ANALYTICAL TOOL OF STRATEGIC COST ANALYSIS”
Vijay Tandon on Value Chain Analysis @ UBS.

4. VALUE CHAIN ANALYSIS
Michael Porter
Vijay Tandon on Value Chain Analysis @ UBS.

5. Value Chain - Identifying ways
Create more customer value
Vijay Tandon on Value Chain Analysis @ UBS.

6. VALUE CHAIN ANALYSIS
Allows the firm to understand
Parts of its
Operations
THAT CREATES VALUE
THOSE THAT DO NOT
Vijay Tandon on Value Chain Analysis @ UBS.
Firms earn above average returns only when the value it creates is greater than
the costs incurred to create that VALUE

7. VALUE CHAIN ANALYSIS
WITHIN AROUND
MEANS OF DESCRIBING THE ACTIVITIES
RELATING THEM - COMPETITIVE STRENGTH
Vijay Tandon on Value Chain Analysis @ UBS.

8. Value Chain Analysis
Value it creates
greater
Costs incurred
to create that
value
Firm earns above average returns
Vijay Tandon on Value Chain Analysis @ UBS.

9. VALUE CHAIN ANALYSIS
NINE STRATEGICALLY RELEVANT ACTIVITIES
Specific
Business
VALUE
COST
Vijay Tandon on Value Chain Analysis @ UBS.

10. Chain of Value creating activities
DESIGN PRODUCE MARKET DELIVER SUPPORT
Every firm is a collection of activities
Vijay Tandon on Value Chain Analysis @ UBS.

11. Value chain segmentation - Activities
PRIMARY
ACTIVITIES SUPPORT
ACTIVITIES

12. PRIMARY ACTIVITIES INVOLVE
PHYSICAL CREATION SALES SERVICEDISTRIBUTION
1 2 3 4
Vijay Tandon on Value Chain Analysis @ UBS.
Value chain - Shows how a product moves from the raw-material stage to
the final customer

13. VALUE CHAIN SEGMENTATION
PRIMARY ACTIVITIES
(GROUPED - 5 MAIN
AREAS) SUPPORT ACTIVITIES
(4 MAIN AREAS)

14. Primary activities/Support
Activities - evaluated relative to
competitors capabilities
Vijay Tandon on Value Chain Analysis @ UBS.

15. Superior Value Delivery Network
CUSTOMERSDISTRIBUTORSSUPPLIERS
Competitive advantage beyond its own operations

16. PRIMARY ACTIVITIES OF ORGANIZATION
MARKETING &
SALES
OPERATIONS
INBOUND
LOGISTICS
OUTBOUND
LOGISTICS
SERVICE
34
2
5
1
Vijay Tandon on Value Chain Analysis @ UBS.

17. Primary activities
OPERATIONS
 Transform these various inputs in to final product
service - Machining, Packaging, assembly, testing2
INBOUND LOGISTICS
 Receiving, storing & distributing - inputs to P/S
 Material handling, Stock control, Transport etc.1
OUTBOUND LOGISTICS
 Collect, Store & distribute the products to
customers (Ware housing, material handling)
 Service - Bringing customers to service
3
MARKETING & SALES
 Create awareness about the product
 Advertising, selling etc.4
SERVICE
 Enhance or maintain the value of a product or
service
 Installation, repair, training & spares
5
Vijay Tandon on Value Chain Analysis @ UBS.

18. SUPPORT
ACTIVITIES
SUPPORT ACTIVITIES
Vijay Tandon on Value Chain Analysis @ UBS.
Support activities provides the
assistance for the Primary
activities to take place

19. SUPPORT ACTIVITIES
 Process of
acquiring various
resource inputs to
the primary
activities
 Systems of
 Planning
 Finance
 Quality control
 Information
management
 Structures & routine
 Key technologies
may be concerned
directly with the
 Product (R&D,
Product Design)
 Process (Process
Development)
 Resource (Raw
material
improvement)
 Activities involved
in
 Recruiting
 Managing
 Training
 Developing
 Rewarding
PROCUREMENT
TECHNOLOGY
DEVELOPMENT
HRM INFRASTRUCTURE

20. Superior Value Delivery Network
CUSTOMERSDISTRIBUTORSSUPPLIERS
Competitive advantage beyond its own operations
Vijay Tandon on Value Chain Analysis @ UBS.

21. VALUE CHAIN (MICHAEL PORTER)
SUPPORT
ACTIVITY 1
SUPPORT
ACTIVITY 2
SUPPORT
ACTIVITY 3
SUPPORT
ACTIVITY 4
OPERATIONS
INBOUND
LOGISTICS
MARKETING
& SALES
OUTBOUND
LOGISTICS
SERVICE
FIRM INFRASTRUCTURE (Gen. mgmt, planning, finance, legal.)
HUMAN RESOURCE MANAGEMENT (recruiting, hiring, training)
TECHNOLOGY DEVELOPMENT (Basic reserach, product design etc.)
PROCUREMENT (Activities completed to purchase the Inputs)
 Receiving
 Storing
 Distributing
 Inputs – P/S
 Material
Handling
 Stock control
 Transport etc.
Transform
inputs
 Final product
 Or Service
 Machining
 Packaging
 Assembly
 Testing etc.
Collect
Store
Distribute
Product to
customers
Warehousing
 Transport etc.
Awareness
Sales
administration
Advertising
Selling
 Enhance or maintain the
value
 Product/Service
 Installation
 Repair
 Training
 Spares
Vijay Tandon on Value Chain Analysis @ UBS.
All items should
be evaluated
relative to
COMPETITORS
CAPABILITIES

22. Apple Value Chain (Example)

23. To be a source of competitive advantage
Resource or Capability must allow the firm
Perform activity - Provides superior values as compared to
competitors
Perform value creating activity - Competitors cannot perform
Vijay Tandon on Value Chain Analysis @ UBS.