VALUE CHAIN APPROACH

INTRODUCTION
Value Chain analysis was first suggested by Michael Porter (1995) as a way of presenting the construction of value as related to end customer. It can: Increase your competitiveness Reduce your costs Improve your market share

Bottom Line - improve overall profitability!

WHAT IS VALUE CHAIN ANALYSIS?

Analysis of activities required to bring a product or service from conception to end markets

Value Chain Analysis

VALUE CHAIN ANALYSIS

Identify:

greatest opportunities for improving industry performance from upgrading

constraints to those opportunities in chain and firms

set of stakeholders in industry who will benefit from investments in upgrading

subset of this group with incentives, skills, resources and power to help drive/make these investments

COMPONENTS OF VALUE CHAIN ANALYSIS

Value Chain Analysis

A VALUE CHAIN ANALYSIS PROCESS

Opportunities for Upgrading

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Constraints to these Opportunities

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Value Chain Analysis Who has Incentives to take advantage of these Opportunities

END MARKET ANALYSIS

Identify end-market opportunities, including: Differentiation New Market Entry

END MARKET ANALYSIS Trend analysis (Boston McKinsey Matrix)

generally available from secondary sources assists go-no-go decision

Trade Leads
identifies actual & potential buyers shifts analysis from market to buyer

Buyer Surveys & Benchmarking

psychological power (buyers voice) power of information (buyer identifies most important criteria) positioning information

CHAIN ANALYSIS
Mapping Interviews with firms all along the chain Analyzing firm data using framework in order to get to chain level opportunities and constraints Vetting and verifying

The Generic Value Chain

Firms infrastructure Human Resource Management Support activities Technology Development

procurement

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Services

Primary activities