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VALUE CHAIN

Group presentation students: B:11 – G: A Instructor : Dr. Ali

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November 2015




:Group Members2 - 3

*Mohammed kamal Eldin Mohammed.*Mustafa Omer Elhassan .*Hassan Adam Yarow.

*Tahir Fikri Tahir .*Khalid Eltigani Abdelrahman .*Ishaq Salih Hussein .

*Alghali Ismail Ishaq.*Ahmed Alsadig Idress .* Hassan Elbashir Musa .

*Mubarak Abubaker Abdallah.




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After this presentation , you should have a goodunderstanding of:How value-chain analysis can help managerscreate value by investigating relationships amongactivities within the firm and between the firm andits customers and suppliers

• Aim of the presentation Value chain2 - 4




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Introduction

value chain analysis

Value chain activities

value of competitive intelligence and Different tools and techniques

how to Develop the value chain

how a firm can use value chain analysis

Value chain system

•Table of ContentValue chain




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Value chain analysis was first suggested by Michael Porter 1985

A value chain is a set of activities that an organization carries out to create value for its customers.

a strategic analysis of an organization that uses value creatingactivities.

To analyze a specific activities through which firms cancreate a competitive advantagethe development of competitive advantage depends not only onthe firm-specific value chain ,but also on the value system ofwhich the firm is apart .

• Introduction :Value chain




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competitive advantage2 - 8

When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantageover its rivals.The goal of much of business strategy is to achieve a sustainable competitive advantage.

Michael Porter argues that there are only two types Of competitive advantage: * Differentiation advantage :providing some kind of unique value to particular customer .

* Cost advantage .




How does your organization create value?

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By acquiring raw materials and using them to produce something useful. ¨ The value that's created and captured by a company is

the profit margin:Margin=Value Created and Captured – Cost of Creating that Value

The more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage.




• Value-Chain Activities Value chain2 - 10




The Formal Elements of Value Chain Analysis 2 - 11

Porter built his value chain analysis model on a manufacturing business – back in 1985 there were many more around in the United States.He split the value chain into two parts:Primary value activities.

Support value activities.




Primary Activity:2 - 12

Inbound LogisticsØ Associated with receiving, warehousing of raw

materials and their distributing tomanufacturing as they are required





OperationsØ Is the process of transforming inputs into the final

product form or service ¤ Efficient plant operations¤ Incorporation of appropriate

process technology¤ Efficient plant layout and

workflow design





Outbound LogisticsØ Associated with collecting, storing, and

distributing the product or service to buyers or is the warehousing and distribution of finish goods .

¤ Effective shipping processesto provide quick delivery and minimize damages

¤ Shipping of goods in large lot sizes to minimize transportation costs.





Marketing and SalesØ 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




Primary Activity2 - 16

ServicesØ Associated with providing service to enhance

or maintain the value of the product¨ The support of customers after the products

and services are sold to them ¤Quick response to customer needs and

emergencies¤Quality of service

personnel and ongoing training




Support Activity2 - 17

Ø Procurement Ø Function of purchasing inputs used in the firm’s

value chain¤ Procurement of raw material inputs¤Development of collaborative “win-win” relationships

with suppliers¤Analysis and selection of alternate sources of inputs to

minimize dependence on one supplier





Human resource management Ø Activities involved in the recruiting, hiring, training,

development, and compensation of all types of employee ¤ Effective recruiting, development, and retention

mechanisms for employees¤Quality relations with trade unions¤ Reward and incentive programs

to motivate all employees





Technology DevelopmentØ Related to a wide range of activities and those

embodied in processes and equipment and the product itself ¤ Effective R&D activitiesfor process and product initiatives¤ Positive collaborative relationships between R&D and other departments¤ Excellent professional qualifications of personnel





Firm infrastructureØ Includes general and planning management ,legal,

finance , accounting , public affairs , and quality management .




Value chain system

Ø the series of activities and process as well as the supply of raw materials or needed inputs involved in producing a product or delivering a service.

Backward channel Forward channel

Business Organization

Raw

mat

eria

ls

Supply Chain Distribution chain

CUSTOMERS

Value chain system




Value chain system 2 - 22




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Five basic tools Strategic analysis

Product –oriented analysis

Behavioural analysis

Financial analysis

Customer oriented analysis ( value chain analysis)

• Different tools and techniques Value chain

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Customer

Information system

Sales and marketing

Customer – oriented value chain




Competitive intelligence2 - 25

Ø The best way to differentiate your company from the competition .

Ø How you gather , manage, and use information will determine whether you win or lose .

Ø Information about opportunities and threats Ø Leveraging information/knowledge to improve

competitive position of companies and local industries

Ø Actionable recommendation from analysis of the environment




Market intelligence VS competitive intelligence

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¨ Market intelligence tells:v a company about the marketplacev Supply and demand for its productsv Drivers that influence demandv Who the buyers and suppliers arev Overall economic outlook for the product

¨Competitive intelligencev Helps a company understand what its competitive position is

in a specific market ( weakness and strengths)




Developing value chain 2 - 27

¨ Value chain analysis requires expertise in more than one area

¨ Competitive intelligence is to be gathered ethically

¨ Developing systematic process for capturing ,analyzing it and disseminating the intelligence and developing the appropriate strategies to enhance your competitors




how a firm can use value chain analysis 2 - 28

¨ Three useful strategic frameworks have been identified for value chain analysis:

v Industry structure analysisv Core competenciesv Segmentation analysis




Value chain Analysis2 - 29




Conclusion : 2 - 30

¨ Value Chain Analysis is a useful way of thinking through the ways in which you deliver value to your customers, and reviewing all of the things you can do to maximize that value.

¨ It takes place as a three stage process:¨ Activity Analysis, ¨ Value Analysis.¨ Evaluation and Planning.¨ By using Value Chain Analysis and by following it

through to action, you can achieve excellence in the things that really matter to your customers.




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