Value Chain Final Version1.5

8/3/2019 Value Chain Final Version1.5

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Value Chain

Sohel Hirani (C022)Harshad Sawant (C014)

Neil Pereira (C042)Aditya Awasthee (C017)

Dinesh Jethva (C010)


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How Value Chain Developed and

what is it?

Michael Porter(1985) response tocriticism that his Five Forces framework

lacked an implementation methodologythat bridged the gap between internalcapabilities and opportunities in thecompetitive landscape

Value Chain Analysis is a useful tool for

workingout howyou can create thegreatest possible value foryourcustomers

Value should be added ateach link

Reference forthis slide

Proven Model

Competitive Advantage: creating and sustaining superiorperformance by Michael Porter


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How Value Chain Developed and

what is it? Helps identify core

competencies and distinguishthose activities that drivecompetitive advantage.

The organization is split into'primary activities' and 'supportactivities'.

Chain series of activities thatcreate and build value.

Culminate total value deliveredby an organization. The 'margin'depicted in the diagram is thesame as added value.

Reference forthis slide Proven Model Competitive Advantage: creating and sustaining superiorperformance by Michael Porter


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Why is Value Chain required?

Helps identify core competencies and distinguish

those activities that drive competitive advantage

It allows firms to identifywhat are theircompetitiveadvantages and shift focus fornecessary actions

Decidingwhetheroutsourcing is required when novalue addition is done in primary as well as secondaryactivities

Reference forthis slide from book Management of strategy byHitt / Hoskisson / Ireland


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Primary Activities Inbound Logistics

Operations Outbound Logistics Marketing & Sales Service

Support Activities Procurement Technology Development Human Resource Management Firm Infrastructure

Evaluating Value Chain Analysis

Reference forthis slide from book Crafting & Executing Strategy by Thompson & Strickland andStrategic Management by L M Prasad


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Primary Activities

Cost effective Inbound Logistics In Operations, company saves cost through higherproductivity

Just-in-time approach

Being a cash-rich and Debt-free company, no interest burden

Satisfied customers are best source of publicity Since bicycle is not a complicated product, Service is not an issue

Value Chain analysis of Hero Cycles

Reference forthis slide from book Strategic Management by L M Prasad


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Support Activities

Firm infrastructure is satisfactory HRM practices reflects Personal Importance

R&D activities oriented to make bicycles more functionallyuseful ratherthan styles

Two centralized procurement systems forhuman resourcesand physical resources

Value Chain analysis of Hero Cycles

continued

Reference forthis slide from book Strategic Management by L M Prasad


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Managers are often stunned when a competitorcuts its priceis to be unbelievably lowers levels orwhen market entrantcomes on strongwith a very lowprice. The competitormaynot be dumping, buying market share orwaging a desperatemove togain sales it may simply have substantially lowercost

In short the higherthe company costs above its close rivalsmore competitively vulnerable it becomes

Importance of Cost in Value Chain

Reference forthis slide from book Crafting & Executing Strategy by Thompson & Strickland


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Activities, cost, andmargins ofsuppliers

Internallyperformed

activities, costs andmargins

Activities, costsand margins of

forward channelallies and strategic

partners

Buyer or end-uservalue chains

Representation of Value Chain for

entire Industry

Representative value chain for an Entire Industry

Supplier-Relatedvalue chains

Company valuechains

Forward Channel

value chains


from book Crafting & Executing Strategy by Thompson & Strickland


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Activity-Based costing

A tool forassessing Companys cost competitiveness

Benchmarking

A tool forassessingwhethera companys value chain costs

are in line

Assessing the company


from book Crafting & Executing Strategy by Thompson & Strickland


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Remedying an Internal Cost Disadvantage

Remedying a supplier-Related cost Disadvantage

Remedying a cost Disadvantage with activities performed by

Forward Channel Allies

Remedying a cost Disadvantage



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We have tried to share the ideas , taking example ofeducation industry

Differentiation in the offerings of university andchange perception

This perception can be used to charge higherfees.

Low cost/price strategy : can be accomplished byreducing the complexityorby limiting service

How betterValue Chain can lead to

Competitive Advantage


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Differentiation: In ordertogain global competitive

advantage and respect, the online learning institutionmust prove that is an it excellent fit forpurpose justnot different

Focus : This strategy is used to choose market nicheswhere competition is the weakest, orwhere theonline learning institution has a competitiveadvantage because of technology

How betterValue Chain can lead to

Competitive Advantage Contd..


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Determining Price-Cost Comparison

Identification of potential value added forthe customer

Identification of potential cost advantages in comparison

with competitors

Application of VCA


from book Crafting & Executing Strategy by Thompson & Strickland &http://www.fao.org/fileadmin/user_upload/fisheries/docs/ValueChain.pdf


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Quickly see the companys strengths orweaknesses

Comparing the strengths and weaknesses of yourorganization with another

Application of VCA Cont..

Reference forthis slide http://www.expertprogrammanagement.com/2011/05/value-chain-examples


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Quickway to identify a potential partnerforstrategicalliances, mergers, oreven an acquisition

Application of VCA Cont..

Reference forthis slide http://www.expertprogrammanagement.com/2011/05/value-chain-examples


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Cost Competitiveness

Efficiencyof managing Value Chain Activities

Strategic Approaches torestore Cost parity

Implement best practices

Revamping the value chain

Relocate high cost activities

Outsourcing

Technology improvements

Value Chain and Strategy



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Innovate around troublesome cost component

Simplify the product design

Make up internal cost disadvantage

Value Chain and Strategy Cont..



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Thank You

Documents

Value Chain Final Version1.5