Value Chain Analysis

PRESENTATION ON
VALUE CHAIN ANALYSIS
Presented By- Ramanpreet Kaur

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Value-Chain Analysis
Value-chain analysis
 a strategic analysis of an organization that
uses value creating activities.
Value is the amount that buyers are
willing to pay for what a firm provides
them and is measured by total revenue
2
Primary activities
 contribute to the physical creation of the
product or service, its sale and transfer to the
buyer, and its service after the sale.
 inbound logistics, operations, outbound
logistics, marketing and sales, and service
3
Support activities
 activities of the value chain that either add
value by themselves or add value through
important relationships with both primary
activities and other support activities
 procurement, technology development,
human resource management, and general
administration.
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The Value Chain
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Primary Activity: Inbound Logistics
Associated with receiving, storing and
distributing inputs to the product
 Location of distribution facilities
 Warehouse layout
and designs
3-6
Primary Activity: Operations
Associated with transforming inputs into
the final product form
 Efficient plant operations
 Incorporation of appropriate process
technology
 Efficient plant layout and workflow design
3-7
Primary Activity: Outbound Logistics
Associated with collecting, storing, and
distributing the product or service to
buyers
 Effective shipping processes to provide quick
delivery and minimize damages
 Shipping of goods in large lot sizes to
minimize transportation costs.
3-8
Primary Activity: Marketing and Sales
Associated with purchases of products
and services by end users and the
inducements used to get them to make
purchases
 Innovative approaches to promotion and
advertising
 Proper identification of customer segments
and needs
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Primary Activity: Service
Associated with providing service to
enhance or maintain the value of the
product
 Quick response to customer needs and
emergencies
 Quality of service
personnel and
ongoing training
3-10
Support Activity: Procurement
Function of purchasing inputs used in the
firm’s value chain
 Procurement of raw material inputs
 Analysis and selection of alternate sources

of inputs to minimize dependence on one
supplier
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Support Activity:
Human Resource Management
Activities involved in the recruiting, hiring,
training, development, and compensation
of all types of personnel
 Effective recruiting, development, and
retention mechanisms for employees
 Quality relations with trade unions
 Reward and incentive programs to motivate
all employees
3-12
Support Activity:
Technology Development
Related to a wide range of activities and
those embodied in processes and
equipment and the product itself
 Effective R&D activities for process and
product initiatives
 Positive collaborative relationships between
R&D and other departments
 Excellent professional qualifications of
personnel
3-13
Support Activity:
General Administration
Typically supports the entire value chain
and not individual activities
 Effective planning systems
 Excellent relationships with diverse
stakeholder groups
 Effective information technology to integrate
value-creating activities
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Advantages-
A big advantage is that the value chain is a
very flexible strategy tool for looking at your
business, your competitors and the respective
places in the industry’s value system.
The value chain can be used to diagnose and

create competitive advantages on both cost
and differentiation.
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Advantages (Contd..)
It helps you to understand the organisation issues involved
with the promise of making customer value commitments
and promises because it focuses attention on the activities
needed to deliver the value proposition.
Comparing your business model with your competitors
using the value chain can give you a much deeper
understanding of your strengths and weaknesses to be
included in your SWOT analysis.
.
3-16
Disadvantages-
The format of the value chain is heavily oriented to a
manufacturing business and the language can be off-
putting for other types of business.
The scale and scope of a value chain analysis can be
intimidating. It can take a lot of work to finish a full value
chain analysis for your company and for your main
competitors so that you can identify and understand the
key differences and strategy drivers.
.
.
3-17
Disadvantages (Contd..)
Many people are familiar with the value chain

but few are experts in its use.
Business information systems are often not

structured in a way to make it easy to get
information for value chain analysis.
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Thank
You!!!
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What are the primary activities in value chain analysis?

What are the support activities in value chain analysis?

PRESENTATION ON

VALUE CHAIN ANALYSIS

Presented By- Ramanpreet Kaur

 Analysis and selection of alternate sources

The value chain can be used to diagnose and

Many people are familiar with the value chain

Business information systems are often not

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