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<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|400px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company. However, as it is the case with most academic frameworks, the high level of complexities in todays business operations and the wide array of stakeholders involved makes it difficult for a firm to obtain the right data in order to conduct an effective analysis. Moreover, the process in itself is highly time consuming, limiting its practicality in today's business operations. <br />
<br />
==References==<br />
<references /><br />
==Annotated Bibliography==<br />
'''Competitive Advantage: Creating and Sustaining Superior Performance (1985), By Michael Porter'''. Michael Porter introduced the concept of separating a company into activities and aligned each activity with supporting parameters that represented the building blocks of competitive advantage in this book. The powerful framework introduced in this book has guided multiple businesses, researchers and business schools to understand the roots of competition.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32778Value Chain Analysis2016-09-26T21:49:38Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|400px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company. However, as it is the case with most academic frameworks, the high level of complexities in todays business operations and the wide array of stakeholders involved makes it difficult for a firm to obtain the right data in order to conduct an effective analysis. Moreover, the process in itself is highly time consuming, limiting its practicality in today's business operations. <br />
<br />
==References==<br />
<references /><br />
==Annotated Bibliography==<br />
'''Competitive Advantage: Creating and Sustaining Superior Performance (1985), By Michael Porter'''. Michael Porter introduced the concept of separating a company into activities and aligned each activity with supporting parameters that represented the building blocks of competitive advantage in this book. The powerful framework introduced in this book has guided multiple businesses, researchers and business schools to understand the roots of competition.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32768Value Chain Analysis2016-09-26T21:47:15Z<p>S150917: /* Annotated Bibliography */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company. However, as it is the case with most academic frameworks, the high level of complexities in todays business operations and the wide array of stakeholders involved makes it difficult for a firm to obtain the right data in order to conduct an effective analysis. Moreover, the process in itself is highly time consuming, limiting its practicality in today's business operations. <br />
<br />
==References==<br />
<references /><br />
==Annotated Bibliography==<br />
'''Competitive Advantage: Creating and Sustaining Superior Performance (1985), By Michael Porter'''. Michael Porter introduced the concept of separating a company into activities and aligned each activity with supporting parameters that represented the building blocks of competitive advantage in this book. The powerful framework introduced in this book has guided multiple businesses, researchers and business schools to understand the roots of competition.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32752Value Chain Analysis2016-09-26T21:44:50Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company. However, as it is the case with most academic frameworks, the high level of complexities in todays business operations and the wide array of stakeholders involved makes it difficult for a firm to obtain the right data in order to conduct an effective analysis. Moreover, the process in itself is highly time consuming, limiting its practicality in today's business operations. <br />
<br />
==References==<br />
<references /><br />
==Annotated Bibliography==<br />
Competitive Advantage: Creating and Sustaining Superior Performance (1985), By Michael Porter. Michael Porter introduced the concept of separating a company into activities and aligned each activity with supporting parameters that represented the building blocks of competitive advantage in this book. The powerful framework introduced in this book has guided multiple businesses, researchers and business schools to understand the roots of competition.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32690Value Chain Analysis2016-09-26T21:31:14Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company. However, as it is the case with most academic frameworks, the high level of complexities in todays business operations and the wide array of stakeholders involved makes it difficult for a firm to obtain the right data in order to conduct an effective analysis. Moreover, the process in itself is highly time consuming, limiting its practicality in today's business operations. <br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32659Value Chain Analysis2016-09-26T21:23:59Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp</ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs.<ref name=four>Undisclosed author, "Value Chaing Analysis," http://www.mindtools.com/pages/article/newTMC_10.htm</ref> In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<ref name=four/><br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<ref name=four/><br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<ref name=four/><br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment <ref>Hergert, M. and Morris, D. (1989), Accounting data for value chain analysis. Strat. Mgmt. J., 10: 175–188.</ref> <ref>Stabell, C. B. and Fjeldstad, Ø. D. (1998), Configuring value for competitive advantage: on chains, shops, and networks. Strat. Mgmt. J., 19: 413–437.</ref><br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32603Value Chain Analysis2016-09-26T21:12:55Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two/> <br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>[http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp] </ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <ref name=deloitte>Deloitte (2004), “Unlocking the value of globalisation. Profiting from continuous optimisation”, A Deloitte Research Global Manufacturing Study </ref><br />
[[File:Deloitte.png|right|400px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed.<ref name=deloitte/> The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<ref name=deloitte/><br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<ref name=deloitte/><br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32564Value Chain Analysis2016-09-26T21:05:26Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement.<ref name= three>[http://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp] </ref><br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <ref name=porter /> <ref name= three /> <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32537Value Chain Analysis2016-09-26T20:58:19Z<p>S150917: /* Organisations Value Chain */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32530Value Chain Analysis2016-09-26T20:57:08Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two> www.themanager.org, Dagmar Recklies, 2001,<br />
Recklies Management Project GmbH </ref><br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32511Value Chain Analysis2016-09-26T20:52:31Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32507Value Chain Analysis2016-09-26T20:51:23Z<p>S150917: /* Organisations Value Chain */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<ref name=two>www.themanager.org, Dagmar Recklies, 2001<br />
Recklies Management Project GmbH < /ref><br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32496Value Chain Analysis2016-09-26T20:49:12Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain.<ref name=porter /> The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities.<ref name=porter /> Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32458Value Chain Analysis2016-09-26T20:42:24Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref name=porter /><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32456Value Chain Analysis2016-09-26T20:41:39Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32447Value Chain Analysis2016-09-26T20:40:23Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32438Value Chain Analysis2016-09-26T20:39:54Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref name=porter> Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster< /ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32409Value Chain Analysis2016-09-26T20:37:48Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster /ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32392Value Chain Analysis2016-09-26T20:34:22Z<p>S150917: /* The Concept */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32383Value Chain Analysis2016-09-26T20:31:53Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<ref>Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon & Schuster</ref><br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.<br />
<br />
==References==<br />
<references /></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32312Value Chain Analysis2016-09-26T20:18:29Z<p>S150917: /* Limitations */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
Similar to that of most academic frameworks, the limitations of value chain analysis can also be summarized into the following points.<br />
* The increasing level of complexities in business operations, in real life, makes it difficult to clearly differentiate between primary and secondary activities<br />
* The analysis requires a complete analysis of all business operations of an organization and the application of the tool can be extremely time consuming.<br />
* Gathering of relevant information required to conduct a value chain analysis can be difficult.<br />
<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32101Value Chain Analysis2016-09-26T19:39:17Z<p>S150917: /* Industry Application */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
<br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32098Value Chain Analysis2016-09-26T19:39:07Z<p>S150917: /* Industry Application */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. <br />
Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32095Value Chain Analysis2016-09-26T19:38:40Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
===Industry Application===<br />
A firm needs to identify and deliberate its value proposition or its differentiation factor while taking its value chain into account. As the value chain analysis aims to improve the profits by creating superior products or services such that the customers are willing to pay a higher price than what it takes to make it, the company’s goal should be to improve its value chain in accordance to its competitive advantage rather than just improving the value chain for the sake of improvement. Two common strategies for attaining a competitive advantage are low cost provider or specialization /differentiation of products or service. <br />
In a low cost provider, the value chain analysis will focus on costs and how to reduce them, while in a specialization strategy; the value chin analysis will focus on uniqueness of the product or service.<br />
<br />
==Evidence of Improved Financial Performance==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32072Value Chain Analysis2016-09-26T19:35:27Z<p>S150917: /* The Concept */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
==Industry Adoption==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32065Value Chain Analysis2016-09-26T19:34:31Z<p>S150917: /* Limitaions */</p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
<br />
==Industry Adoption==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitations==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
* Difficulty in managing the exchange of sensitive information.<br />
* A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
* The fear of information abuse is high and it could lead to drastic problems<br />
* Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=32055Value Chain Analysis2016-09-26T19:32:35Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities in and around an organization and links them to an analysis of competitive strength of the organization. The analysis assesses which value every specific activity adds to the organisations products or services. This thought was based upon the knowledge that an organisation is more than an arbitrary gathering of machine, equipment, people and money. In order to produce something the customers are willing to pay for, these things have to be arranged into systems and systematic activities. According to Michael Porter, the ability of an organization to perform certain activities and to manage the linkages between those activities is through which competitive advantage can be gained.<br />
Porter differentiates between two sets of activities. All activities that are directly related to the creation or delivery of a product or service are called primary activities and support activities are those activities that are linked to each primary activity that tries to improves its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term Margin refers to the profit margin the company makes out of the activities of its value chain. The margin is correlated with the company’s ability to articulate properly all the activities of the value chain. A high margin means the company is able to sell a product or a service for a much higher price than the cost of all the activities of the value chain. <br />
The linkages are flows of information, goods, services, and systems or processes adjusting activities. Here are some examples to get a better idea of their importance.<br />
If the marketing & sales activities provide sales forecasts for the next period to all other departments reliable and on time, procurement will be able to order the right material for the correct date. Following this reasoning, if procurement forwards the orders to inbound logistics, then operations will be able to schedule production in order to forwarded it to the outbound logistics and guarantee the delivery of the products on time, meaning as expected by marketing & sales. <br />
This is why linkages are extremely important and represent the cooperation and information flow between the value chain activities needed to run the activities. <br />
<br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
<br />
==Industry Adoption==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitaions==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
• Difficulty in managing the exchange of sensitive information.<br />
• A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
• The fear of information abuse is high and it could lead to drastic problems<br />
• Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=31887Value Chain Analysis2016-09-26T19:00:05Z<p>S150917: </p>
<hr />
<div>The term Value Chain is one of Michael Porter most famous concept along the five forces. It was introduced in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). An analysis of the value chain both describes the activities of an organization and links them to the competitive position of the organization. This analysis results in identifying the activities that are a source of cost or lead to a differentiation advantage and those that could improve the competitive advantage of the company or of the project. This tool helps companies designing viable products or services at the right price.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, the activities of the value chain, from product design, production of components, and final assembly to delivery to the final user, are not all handled by the company. Organisations are, as a result, part of a value system (does it ned to be defined? ) or supply chain. When analyzing the value chain, it is important to consider the one of the whole value system the chain is embedded in.<br />
Within the whole value system, only a certain part of profit margin is available to the company. As stated previously, the profit margin is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. It depends on how the value system is structured, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each organization in the system will negotiate and use its market position to get a higher share of the margin. However, collaborations and cooperation can be encouraged if there is the opportunity for both companies to improve their efficiency and reduce their costs. The result is to achieve a higher total margin that benefits of all of them. An example is reducing stocks in a Just-In-Time system.<br />
<br />
<br />
==Industry Adoption==<br />
In 2004, Deloitte conducted a research into international value chains and found evidence of improved financial performance of companies adopting value chain principles [1]. The analysis was based upon 300 survey respondents, each with annual revenues of at least US$200 million. <br />
[[File:Deloitte.png|right|300px]]<br />
The survey recognized that companies that could be categorized as ‘value chain complexity masters’ were on an average 73% more profitable than the other companies surveyed. The identification of value chain complexity masters were based on their value chain capabilities such as product innovation, sourcing effectiveness, flexibility, productivity, product quality, cost effectiveness, time to market, supply chain costs structures, and customer service, and the value chain complexity factors such as the global dispersion of the entire supply chain from sourcing to sales. Companies with high complexity and high capability were classified as a complexity master.<br />
<br />
The results from the survey shows that the complexity masters, in comparison to the other organisations had higher competences in:<br />
<br />
* Customer related operations - broad interest in client coordinated effort ventures and client relationship management. <br />
<br />
* Product related operation - enhancements in R&D through better process incorporation and interests in product information management systems and product lifecycle management systems. <br />
<br />
* Supply chain operations - described by execution change activities such as quality management, fast changeover, lean manufacturing, and technologies such as warehouse management, planning and scheduling softwares and transportation systems.<br />
<br />
Even though the research is not published in the peer reviewed academic literature, it validates that the value chain analysis is critical in achieving competitive advantage. It exhibits that best practice leads to superior financial performance.<br />
<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*Recruitment methods? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitaions==<br />
Although both academics and industries have generally accepted Porter’s model of competitive analysis as a conceptual strategy model, it has been commonly described as deficient for use in todays environment [Hergert & Morris, 1989; Stabell & Fjeldstad, 1998]<br />
A few concerns in the general approach of the value chain model also include:<br />
• Difficulty in managing the exchange of sensitive information.<br />
• A decrease in cost and increase in benefits of one firm may yield to a negative impact on one of the partner firms.<br />
• The fear of information abuse is high and it could lead to drastic problems<br />
• Creating visibility along the whole supply chain in itself is a challenge and it stalls the progress of any analysis undertaken.<br />
<br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is a very useful management tool that helps to identify key activities which yields to the creation of superior product or service that is of high value to the customer. The analysis helps to maximize profits by creating superior product or service for which the customers are willing to pay a premium price, that exceeds the cost of production. Michael Porter created this useful model through which work products are broken down into various activities, which allows the management to focus on the truly useful activities that creates value to the organization. The value chain analysis also adds to the competitive advantage strategy of the company, helping to determine the vision and set direction for future products and services. The analysis also validates the supporting activities, which are often overlooked but are integral part to the value chain and value proposition of a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25192Value Chain Analysis2016-09-16T21:26:36Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
<br />
<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
[[File:Deloitte.png|right|300px]]<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.<br />
Compared to other companies in the survey, complexity masters had developed superior capabilities in (Deloitte, 2004): <br />
* Customer related operations - extensive investment in customer collaboration projects and customer relationship management. <br />
* Product related operation - improvements in R&D through better process integration and investments in product data management systems and product lifecycle management systems. <br />
* Supply chain operations - characterised by performance improvement initiatives such as quality management, quick change-over, lean manufacturing, and had also invest heavily in technologies such as advanced planning and scheduling software, warehouse management and transportation systems. <br />
Although not published in the peer-reviewed academic literature, this research confirms that the value chain model is important in achieving competitive advantage. It demonstrates that where best practice is found, superior financial performance is also found.<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*How does recruitment takes place? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitaions==<br />
Porter’s model for competitive analysis has generally found acceptance amongst both academics and industrial practitioners as a conceptual strategy model. However, it has been frequently described as being deficient for use in today’s environment (Hergert & Morris, 1989; Stabell & Fjeldstad, 1998). Dekker (2003) and Hines & Rich (1997) have both identified problems in the general approach of the value chain model: <br />
*The exchange of sensitive information is difficult to manage; <br />
*A fair division of the cost and benefits may be desirable, but how can this be objectively decided and what if this impact negatively on one of the partner firms; <br />
*Participants fear that information abuse could be a big problem; and <br />
*Lack of tools appropriate for creating visibility to enable any analysis to be undertaken. <br />
<br />
<br />
==Conclusion==<br />
Value chain analysis is an extremely useful management tool which identifies the activities that go into creating a superior product or service that is highly valued by customers. The outcome of creating this highly valued product is that customers are willing to pay a premium, which exceeds its costs thereby delivering higher profit. The usefulness of this model created by Michael Porter is mostly seen in its ability to breakdown work product into various activity groups to strategically focus the management on what are truly useful activities and what creates value. It also concentrates a company to determine a vision-a competitive advantage strategy- which will drive future products and services. Supporting activities are further validated in the process creating an understanding that these sometimes overlooked activities are integral to the value chain and value proposition for a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25179Value Chain Analysis2016-09-16T21:24:26Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
<br />
<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
[[File:Deloitte.png|right|300px]]<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.<br />
Compared to other companies in the survey, complexity masters had developed superior capabilities in (Deloitte, 2004): <br />
* Customer related operations - extensive investment in customer collaboration projects and customer relationship management. <br />
* Product related operation - improvements in R&D through better process integration and investments in product data management systems and product lifecycle management systems. <br />
* Supply chain operations - characterised by performance improvement initiatives such as quality management, quick change-over, lean manufacturing, and had also invest heavily in technologies such as advanced planning and scheduling software, warehouse management and transportation systems. <br />
Although not published in the peer-reviewed academic literature, this research confirms that the value chain model is important in achieving competitive advantage. It demonstrates that where best practice is found, superior financial performance is also found.<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*How does recruitment takes place? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.<br />
<br />
==Limitaions==<br />
<br />
==Conclusion==<br />
Value chain analysis is an extremely useful management tool which identifies the activities that go into creating a superior product or service that is highly valued by customers. The outcome of creating this highly valued product is that customers are willing to pay a premium, which exceeds its costs thereby delivering higher profit. The usefulness of this model created by Michael Porter is mostly seen in its ability to breakdown work product into various activity groups to strategically focus the management on what are truly useful activities and what creates value. It also concentrates a company to determine a vision-a competitive advantage strategy- which will drive future products and services. Supporting activities are further validated in the process creating an understanding that these sometimes overlooked activities are integral to the value chain and value proposition for a company.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25169Value Chain Analysis2016-09-16T21:21:08Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
<br />
<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
[[File:Deloitte.png|right|300px]]<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.<br />
Compared to other companies in the survey, complexity masters had developed superior capabilities in (Deloitte, 2004): <br />
* Customer related operations - extensive investment in customer collaboration projects and customer relationship management. <br />
* Product related operation - improvements in R&D through better process integration and investments in product data management systems and product lifecycle management systems. <br />
* Supply chain operations - characterised by performance improvement initiatives such as quality management, quick change-over, lean manufacturing, and had also invest heavily in technologies such as advanced planning and scheduling software, warehouse management and transportation systems. <br />
Although not published in the peer-reviewed academic literature, this research confirms that the value chain model is important in achieving competitive advantage. It demonstrates that where best practice is found, superior financial performance is also found.<br />
<br />
==Value Chain Analysis as a Project Management Tool==<br />
Using value chain analysis as a project management tool will help the project team to identify methods through which value can be added for both internal and external customers. It will further help to maximize this value created.<br />
<br />
The tool can be used in a three-step process:<br />
<br />
===Analysis stage===<br />
Identification of activities to undertake in order to deliver the product or service.<br />
<br />
The Activity Analysis stage requires the project team to brainstorm the activities necessary to undertake the project in order to add value, which eventually contributes to the end-user's experience. Therefore, this step requires an organized business process, which includes marketing, sales, order taking, operational process, delivery and support etc. that would help serve the customer needs. In other words, this stage requires the project team to carry out a systematic flow of work. Furthermore, it would also involve other factors such as:<br />
<br />
*How does the project motivate the team to perform more effectively?<br />
*How does recruitment takes place? Recruitment of effective individuals with the right skill would give best value.<br />
*How to select and develop technologies and techniques?<br />
*How to keep up-to-date with effective technologies and techniques?<br />
*How to get feedback from customers on performance?<br />
The activities are then listed in a simple flow chart, giving a good visual representation of the value chain.<br />
<br />
===Value Analysis stage=== <br />
Maximizing the value of each activity in developing the product or service.<br />
<br />
The Value Analysis stage involves the project team to list value factors for each of the activity identified in the first stage. Value factors are those that the customers would value when an activity is conducted and they vary with the nature of business. In order to maximize the value for each activity, the requirements of what has to be done or changed is put down besides each value factors.<br />
<br />
===Evaluating Changes and Planning of Action stage===<br />
Evaluation of changes and deciding whether the changes are worth making. The action plan is then followed to complete the project.<br />
<br />
The final stage involves the project team evaluating the changes and plans for action. <br />
The team has to prioritize from the list of generated ideas that adds value to the customer and pick the quick and simple tasks to increase the team spirit, subsequently adhering to the remaining changes. The more difficult tasks are tackled in a systemic manner, providing a steady improvement.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25155Value Chain Analysis2016-09-16T21:13:57Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
<br />
<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
[[File:Deloitte.png|right|300px]]<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.<br />
Compared to other companies in the survey, complexity masters had developed superior capabilities in (Deloitte, 2004): <br />
* Customer related operations - extensive investment in customer collaboration projects and customer relationship management. <br />
* Product related operation - improvements in R&D through better process integration and investments in product data management systems and product lifecycle management systems. <br />
* Supply chain operations - characterised by performance improvement initiatives such as quality management, quick change-over, lean manufacturing, and had also invest heavily in technologies such as advanced planning and scheduling software, warehouse management and transportation systems. <br />
Although not published in the peer-reviewed academic literature, this research confirms that the value chain model is important in achieving competitive advantage. It demonstrates that where best practice is found, superior financial performance is also found.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25153Value Chain Analysis2016-09-16T21:12:53Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
<br />
<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
[[File:Deloitte.png|right|300px]]<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25149Value Chain Analysis2016-09-16T21:11:18Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right|300px]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.</div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25147Value Chain Analysis2016-09-16T21:10:35Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).<br />
==Industry Adoption==<br />
The evidence of improved financial performance of companies adopting value chain principles can be highlighted from a survey conducted by Deloitte, conducting research into international value chains.<br />
The Deloitte survey (Deloitte, 2004) identified that companies, which could be classified as ‘value chain complexity masters’ (Deloitte, 2004), were distinctly more profitable that other companies surveyed, on average 73% more profitable.<br />
The analysis is based on 300 survey respondents, each with annual revenues of at least US$200 million. Value chain complexity masters were identified by value chain capability factors (product innovation, time to market, sourcing effectiveness, product quality, manufacturing flexibility, manufacturing productivity and cost effectiveness, customer service and supply chain cost structure) and value chain complexity factors (global dispersion of value chain functions – sourcing, manufacturing, engineering, and marketing & sales). The companies that had a high complexity and high capability they were classed as a complexity master’.</div>S150917http://13.50.150.85/index.php?title=File:Deloitte.png&diff=25143File:Deloitte.png2016-09-16T21:08:05Z<p>S150917: </p>
<hr />
<div></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25108Value Chain Analysis2016-09-16T20:50:13Z<p>S150917: </p>
<hr />
<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
===Organisations Value Chain===<br />
[[File:Organisation value chain.png|right]]<br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.<br />
Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service (e.g. raw material, energy etc.). It depends on the structure of the value system, how this margin spreads across the suppliers, producers, distributors, customers, and other elements of the value system. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them (e.g. by reducing stocks in a Just-In-Time system).</div>S150917http://13.50.150.85/index.php?title=File:Organisation_value_chain.png&diff=25100File:Organisation value chain.png2016-09-16T20:47:13Z<p>S150917: </p>
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<div></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=25090Value Chain Analysis2016-09-16T20:42:01Z<p>S150917: </p>
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<div>The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
<br />
== The Concept ==<br />
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage. <br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
[[File:The basic model of Porters Value Chain.png|right|The basic model of Porters Value Chain]]<br />
===Primary Activities===<br />
* Inbound Logistics: all activities associated with the receiving, distributing and storing of incoming materials <br />
* Operations: converting inputs (raw materials, energy and labor) into outputs (the final product/service)<br />
* Outbound Logistics: all activities associated with the storage and movement of the final product to the end user<br />
* Marketing and Sales: all activities involved in the assessment and encouragement of customers to purchase and the activities associated in providing a medium to purchase the product<br />
* Service: activities related to the maintenance and enhancement of value to the end user after the product is sold<br />
===Secondary Activities===<br />
* Procurement: the acquisition of goods or services from an external source<br />
* Human Resource Management: all activities associated with the management of people as per the requirements<br />
* Technology Development: all activities related to the equipment, hardware, software, technical knowledge and procedures to transform the inputs into outputs<br />
* Infrastructure: all other activities including legal, finance, accounting, public relations and quality assurance<br />
<br />
===Margin===<br />
The term 'Margin' implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. <br />
The linkages are flows of information, goods and services, as well as systems and processes for adjusting activities. Their importance is best illustrated with some simple examples:<br />
Only if the Marketing & Sales function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy, procurement will be able to order the necessary material for the correct date. And only if procurement does a good job and forwards order information to inbound logistics, only then operations will be able to schedule production in a way that guarantees the delivery of products in a timely and effective manner – as predetermined by marketing. <br />
In the result, the linkages are about seamless cooperation and information flow between the value chain activities. <br />
In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organizations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organization operates.</div>S150917http://13.50.150.85/index.php?title=File:The_basic_model_of_Porters_Value_Chain.png&diff=25071File:The basic model of Porters Value Chain.png2016-09-16T20:32:02Z<p>S150917: </p>
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<div></div>S150917http://13.50.150.85/index.php?title=Articles_Fall_Term_2016&diff=20187Articles Fall Term 20162016-09-12T06:22:42Z<p>S150917: </p>
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<div>{| class="wikitable"<br />
|+ '''Disclaimer!<br />
|-<br />
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=Overview of 2016 Wiki articles=<br />
<br />
{| class="wikitable sortable"<br />
|+Fall 2016 Wiki Articles<br />
|-<br />
!Group Number<br />
!First Name<br />
!Last Name<br />
!Wiki User Name<br />
!Link to Wiki article<br />
|-<br />
|<br />
|Aitor<br />
|Altuna<br />
|aitor.altuna<br />
|[[Knowledge management in projects and organizations]]<br />
|-|<br />
| 06<br />
|Alexander Daniel<br />
|Marcussen<br />
|Alm92<br />
|[[Understand best practices based on network mapping]]<br />
|-<br />
|15<br />
|Alexander<br />
|Michel<br />
|Alexm<br />
|[[Portfolio Management using the BCG-Matrix]]<br />
<br />
|-<br />
|<br />
|Amedeo<br />
|Mocchiutti<br />
|<br />
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|-<br />
|<br />
|Anastasia<br />
|Stella<br />
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|-<br />
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|Andrzej<br />
|Stanek<br />
|Andstan<br />
|<br />
|-<br />
|13<br />
|Anika Zandra<br />
|Alcoat<br />
|zaac<br />
||[[Risk and Opportunities Management]]<br />
|-<br />
|<br />
|Anna<br />
|Paparizou<br />
|<br />
|<br />
|-<br />
|<br />
|Anne <br />
|Folkvard Petersen<br />
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|<br />
|-<br />
|<br />
|Apostolos<br />
|Bougas<br />
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|-<br />
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|Arjun Abraham<br />
|Punnen<br />
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|-<br />
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|Arnaldo<br />
|Landivar Taborga<br />
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|Aromi<br />
|Salot<br />
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|-<br />
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|Artem<br />
|Chernyshev<br />
|<br />
|<br />
|-<br />
|5<br />
|Arvin<br />
|Fattah<br />
|Arvin<br />
|[[Fault Tree Analysis in Projects]]<br />
|-<br />
|<br />
|Astrid<br />
|Greve Rokne<br />
|<br />
|<br />
|-<br />
|4<br />
|Birthe<br />
|Wohlenberg<br />
|BWO<br />
|[[Myers-Briggs Type Indicator]]<br />
|-<br />
|7<br />
|Bjarni Jakob<br />
|Gunnarsson<br />
|Bjarni Jakob<br />
|[[Risk management process]]<br />
|-|<br />
|<br />
|Camilla Engstrøm<br />
|Jensen<br />
|<br />
|<br />
|-<br />
|14<br />
|Camille<br />
|Bortot<br />
|Camille.Bortot<br />
|[[International Project Management ]]<br />
|-<br />
|8<br />
|Carl Johan Fokdal<br />
|Christensen<br />
|CJ<br />
|[[Lean Design Management]]<br />
|-<br />
|<br />
|Carlos<br />
|Sanchez Garcia<br />
|<br />
|<br />
|-<br />
|<br />
|Chalida<br />
|Jaidee<br />
|Chalidaj<br />
|[[The Critical Path Method in project planning]]<br />
|-<br />
|<br />
|Charlotte Cecilie<br />
|Søgaard<br />
|<br />
|<br />
|-<br />
|<br />
|Christian Haim<br />
|Raben<br />
|Christian<br />
|[[Managing Portfolio Complexity]]<br />
|-<br />
|5<br />
|Christian Lolk<br />
|Thomsen<br />
|<br />
|[[Multi-criteria decision making (MCDM) for Project selection]]<br />
|-<br />
|3<br />
|Christian Vindegaard<br />
|Grønberg<br />
|Vindegaard<br />
|[[AHP as a Decision Making Tool in Projects, Programs and Portfolios]]<br />
|-|<br />
|2<br />
|Christiane Steenbergh<br />
|Myrup<br />
|Chrisitane<br />
|[[Last Planner System as a project management tool]]<br />
|-<br />
|<br />
|Christoffer Koza<br />
|Hansen<br />
|Christoffer Koza<br />
|[[Total Quality Management]]<br />
|-|<br />
|<br />
|Clement Victor Emile<br />
|Hammel<br />
|<br />
|<br />
|-<br />
|<br />
|Davide<br />
|Paganini<br />
|<br />
|<br />
|-<br />
|<br />
|Edvinas<br />
|Zamaratskis<br />
|<br />
|<br />
|-<br />
|8<br />
|Erika<br />
|di Pietro<br />
|s155375<br />
|[[Sustainability in Project and Portfolio Management]]<br />
|-<br />
|11<br />
|Evdoxia<br />
|Pertsinidou<br />
|S151128<br />
|[[Implementation of the project management phases in volunteer NGOs: The case of BEST]]<br />
|-<br />
|<br />
|Evgeniya Ventsislavova<br />
|Garkova<br />
|s160807<br />
|[[The Kaizen – Toyota KATA method]]<br />
|-<br />
|<br />
|Ewa Joanna<br />
|Kunkel<br />
|<br />
|<br />
|-<br />
|<br />
|Fabricio Gasparin<br />
|Lucchesi<br />
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|Federico<br />
|Riccardo<br />
|<br />
|<br />
|-<br />
|<br />
|Filip Møller Knudsen<br />
|Knudsen<br />
|Fmk<br />
|[[Risk Management In Construction Projects]]<br />
|-<br />
|<br />
|Filippo<br />
|Gioanina<br />
|<br />
|<br />
|-<br />
|<br />
|Franziska<br />
|Schorr<br />
|<br />
|<br />
|-<br />
|3<br />
|Frederik<br />
|Skjoldborg<br />
|S113430<br />
|[[Challenges_in_cross-cultural_project_management]]<br />
|-<br />
|<br />
|Georg Maximilian Ruven<br />
|Schriewersmann<br />
|Mschriew<br />
|[[Reference class forecasting and the corresponding limitations]]<br />
|<br />
|-<br />
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|Georgios<br />
|Nikou<br />
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|-<br />
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|Gudjon<br />
|Arngrimsson<br />
|<br />
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|-<br />
|7<br />
|Gudrún Thóra<br />
|Reynisdóttir<br />
|s124692<br />
|[[Critical-Chain Approach]]<br />
|-<br />
|<br />
|Gunnar Thorlakur<br />
|Thorsson<br />
|<br />
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|-<br />
|12<br />
|Iðunn Tara<br />
|Ásgrímsdóttir<br />
|IdunnTara<br />
|[[Theory of Constraints in Software Development]]<br />
|-<br />
|<br />
|Igor<br />
|Juko<br />
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|-<br />
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|Ingrid<br />
|Berg<br />
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|-<br />
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|Ioannis<br />
|Milakas-Tsamouras<br />
|<br />
|<br />
|-<br />
|01<br />
|Jeanette Garst<br />
|Johansen<br />
|JeanetteGJ<br />
|[[The use of Gantt chart in project management]]<br />
|-<br />
|<br />
|Jens Dines Obel<br />
|Jepsen<br />
|DinesObelJepsen<br />
|[[Logical Framework Approach in Project Planning]] <br />
|-<br />
|<br />
|João Pedro<br />
|Castro<br />
|<br />
|<br />
|-<br />
|<br />
|Johan Knudegaard<br />
|Engesgaard<br />
|<br />
|<br />
|-<br />
|<br />
|Jorge Horacio<br />
|Ramirez Basurto<br />
|<br />
|<br />
|-<br />
|11<br />
|Jose de Jesus<br />
|Cruz Contreras<br />
|ppmex84<br />
|[[The light at the end of the tunnel: managing challenges at Heathrow Express Project]]<br />
|-<br />
|10<br />
|Joseph<br />
|Kurian<br />
|s150917<br />
|[[Value Chain Analysis]]<br />
|-<br />
|15<br />
|Kai-Sören Sokolowski<br />
|Sokolowski<br />
|Kai<br />
|[[Scrum in the context of lean and agile project management]]<br />
|-<br />
|4<br />
|Katrine Bager<br />
|Olesen<br />
|S113525<br />
|[[The Decision Matrix]]<br />
|-<br />
|10<br />
|Line Hye Sun<br />
|Elmshøj<br />
|s123449<br />
|[[Knowledge sharing in project management]]<br />
|-<br />
|<br />
|Magnus<br />
|Schulz<br />
|MSchulz<br />
|[[Earned Value Analysis]]<br />
|-<br />
|15<br />
|Marco<br />
|Carloni<br />
|<br />
|[[Visual tool method: bubble diagram]]<br />
|-<br />
|13<br />
|Marco<br />
|Ronzoni<br />
|Marcoronzoni<br />
|[[The Delphi Technique in Project Management]]<br />
|-<br />
|8<br />
|Maria Vittoria<br />
|Onori<br />
|M vittoria<br />
|[[Managing Projects with Earned Value Management]]<br />
|-<br />
|11<br />
|Maria<br />
|Saridaki<br />
|SaridakiM<br />
|[[Building Information Modeling in project management]]<br />
|-<br />
|<br />
|Marit Moberg<br />
|Vossgård<br />
|MAVO<br />
|[[Kanban in Project Management]]<br />
|-<br />
|11<br />
|Marouana Oulfat<br />
|Afroukh<br />
|S152191<br />
|[[Managing Group Development using the Johari Window]]<br />
|-<br />
|<br />
|Matilde Nygaard <br />
|Pedersen<br />
|<br />
|<br />
|-<br />
|<br />
|Mehmet Cagri<br />
|Hekim<br />
|<br />
|<br />
|-<br />
|2<br />
|Mie Louise Elsborg<br />
|Drejer<br />
|Mie Drejer<br />
| [[VDC as a project management tool on construction projects ]]<br />
|-<br />
|<br />
|Miguel Martínez <br />
|Montaña<br />
|<br />
|<br />
|-<br />
|13<br />
|Natacha <br />
|Leduc<br />
|natacha<br />
|[[How to successfully go through the Five Stages of Team Development]]<br />
|-<br />
|13<br />
|Nicklas<br />
|Risager <br />
|Gnoff<br />
|[[The Leader's role and how it differs betwen projects, programs and portfolios]]<br />
|-<br />
|<br />
|Niels Aksel<br />
|Madsen<br />
|<br />
|<br />
|-<br />
|6<br />
|Niels Christian <br />
|Kirk<br />
|Kirk1993<br />
|[[Leading the group]]<br />
|-<br />
|<br />
|Nikolaj Friis<br />
|Hansen<br />
|<br />
|<br />
|-<br />
|<br />
|Nikolaos <br />
|Gavriilidis<br />
|Nikolaos<br />
|[[Cost Estimation Techniques for Projects]]<br />
|-<br />
|7<br />
|Olöf Run<br />
|Sigurjonsdottir<br />
|s150964<br />
|[[Critical Path Methods]]<br />
|-<br />
|<br />
|Pablo Jose Guerra<br />
|Guerra<br />
|<br />
|<br />
|-<br />
|6<br />
|Phillip<br />
|Hasselbalch<br />
|Tjimo<br />
|[[Best Practices for Project Portfolio Selection]]<br />
|-<br />
|7 <br />
|Ragna<br />
|Helgadóttir<br />
|S155273<br />
|[[Lean Management and use of the Last Planner System in Construction Projects]]<br />
|-<br />
|<br />
|Raivo<br />
|Kalderauskis<br />
|Raivo Kalderauskis<br />
|[[Advantages of BIM for management of building projects ]]<br />
|-<br />
|14<br />
|Raphaël<br />
|Lassaux<br />
|Lassauxr<br />
|[[Management of remote project]]<br />
|-<br />
|<br />
|Riccardo<br />
|Ferranti<br />
|<br />
|<br />
|-<br />
|01<br />
|Rikke Klavstrup <br />
|Wittendorff<br />
|RikkeWitten<br />
|[[Information and Communication Technology (ICT) Management in construction]]<br />
|-<br />
|<br />
|Robin<br />
|Hertenberger<br />
|RobinH<br />
|[[Stakeholder Management in Wind Power Projects]]<br />
|-<br />
|<br />
|Romain<br />
|Clouzeau<br />
|Romain Clouzeau<br />
|[[Including Risk Management in Construction Projects]]<br />
|-<br />
|<br />
|Rosa Elisabeth<br />
|Lindqvist<br />
|Relindqvist<br />
|[[Facilitated Work Sessions]]<br />
|-<br />
|<br />
|Sanka Chrishan <br />
|Hettiarachchi Gunawardena<br />
|<br />
|<br />
|-<br />
|16<br />
|Sean<br />
|O'Regan<br />
|OReganS<br />
|[[Stakeholder Expectations Management]]<br />
|-<br />
|16<br />
|Sebastian <br />
|Bauer<br />
|Sebastian Bauer<br />
|[[Roadmapping in Program Management]]<br />
|-<br />
|10<br />
|Selma Lind<br />
|Jonsdottir<br />
|S151176<br />
|[[The Critical Path Method (CPM) in Project Management]]<br />
|-<br />
|<br />
|Sheren <br />
|Agbarie<br />
|<br />
|<br />
|-<br />
|4<br />
|Signe Skovmand<br />
|Jakobsen<br />
|SSJ<br />
|[[Visual Project Management - War Rooms]]<br />
|-<br />
|<br />
|Siri <br />
|Lassen-Urdahl<br />
|<br />
|<br />
|-<br />
|16<br />
|Sofia<br />
|Griggio<br />
|SofiaGriggio<br />
|[[The Agile methodology and its frameworks]]<br />
|-<br />
|4<br />
|Sofie <br />
|Olesen<br />
|s104809<br />
|[[Project Management Maturity Model]]<br />
|-<br />
|4<br />
|Somar Faraj <br />
|Hassan<br />
|Somar<br />
|[[TFV-model]]<br />
|-<br />
|15<br />
|Stefan<br />
|Schenk<br />
|Stefan.schenk<br />
|[[Challenges and Execution of Innovation Portfolio Management]]<br />
|-<br />
|5<br />
|Stefan Borch<br />
|Bilfeldt<br />
|Stefan<br />
|[[Risk-Reward Bubble Diagrams in Project Portfolio Prioritization]]<br />
|-<br />
|<br />
|Stefán Geir<br />
|Sigfússon<br />
|<br />
|<br />
|-<br />
|9<br />
|Sveinn <br />
|Isleifsson<br />
|Sveinnis<br />
|[[Project Quality Management]]<br />
|-<br />
|<br />
|Swaroop Kumar<br />
|Sahu<br />
|<br />
|<br />
|-<br />
|<br />
|Thorgeir<br />
|Sveinsson<br />
|thorgeir11<br />
|[[Earned Value Management (EVM) in construction projects]]<br />
|-<br />
|<br />
|Tim <br />
|Jonas<br />
|<br />
|<br />
|-<br />
|<br />
|Timea-Denisa<br />
|Merca<br />
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|<br />
|-<br />
|<br />
|Timokleia<br />
|Orfanidou<br />
|<br />
|<br />
|-<br />
|6<br />
|Tobias Lyck Bjært<br />
| Sørensen<br />
|Tobias Sørensen<br />
|[[Stakeholder Network]]<br />
|-<br />
|2<br />
|Trine<br />
|Marquardsen<br />
|Trinemarquardsen<br />
|[[Managing Stakeholders in Construction]]<br />
|-<br />
|<br />
|Vittorio<br />
|Albertazzi<br />
|<br />
|<br />
|-<br />
|16<br />
|Wilfried<br />
|Genier<br />
|Wilfried_Genier<br />
|[[Valuation methods in Project Portfolio Optimization - Focus on Real Options]]<br />
|-<br />
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|Yann Mamy<br />
|Randrianarison<br />
|<br />
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|-<br />
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|Jia<br />
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|-<br />
|11<br />
|Zsofia Dora<br />
|Helmeczi<br />
|s155698<br />
|[[The use of Last Planner System in highly specialised construction projects]]<br />
|- <br />
|12<br />
|Jakob<br />
|Rolfsson<br />
|s150892<br />
|[[Scrum method]]<br />
|-<br />
|- <br />
|8<br />
|Tabea<br />
|Ramirez Hernandez<br />
|s152377<br />
|[[Project Management in the Fuzzy Front End]]<br />
|-<br />
|- <br />
|12<br />
|Fridrik<br />
|Karlsson<br />
|s150948<br />
|[[Scrum an Agile Framework]]<br />
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</pre></div>S150917http://13.50.150.85/index.php?title=Value_Chain_Analysis&diff=20181Value Chain Analysis2016-09-12T06:16:28Z<p>S150917: Created page with " == Abstract == Michael Porter (1985) first suggested the concept of value chain to illustrate how value adds along a chain of activities, which leads to an end product or ser..."</p>
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== Abstract ==<br />
Michael Porter (1985) first suggested the concept of value chain to illustrate how value adds along a chain of activities, which leads to an end product or service. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
This article aims to elaborate on the methodology of Value Chain Analysis, discussing its current and future application along with its benefits and limitations.</div>S150917http://13.50.150.85/index.php?title=User_talk:S150917&diff=20180User talk:S1509172016-09-12T06:11:33Z<p>S150917: Created page with "Value Chain Analysis == Abstract == Michael Porter (1985) first suggested the concept of value chain to illustrate how value adds along a chain of activities, which lead..."</p>
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<div>[[Value Chain Analysis]]<br />
<br />
== Abstract ==<br />
<br />
Michael Porter (1985) first suggested the concept of value chain to illustrate how value adds along a chain of activities, which leads to an end product or service. The goal of this analysis is to identify activities that are a source of cost or differentiation advantage and to identify those that could yield to the firms/projects competitive advantage, thereby helping to create products or services at a price which the customers are willing to pay for.<br />
Porter distinguishes between two sets of activities. Activities that are directly associated with the creation or delivery of a product or service are termed primary activities and support activities are those that are linked to each primary activity that aims to improve its efficiency and effectiveness.<br />
This article aims to elaborate on the methodology of Value Chain Analysis, discussing its current and future application along with its benefits and limitations.</div>S150917