Leg 6. From Hong Kong to Auckland (II). Just starting with Value Chain Analysis.
Hope you are doing fine and happy with all your activities for this Friday. Next week is Valentine´s day!!! It is one day of the year to celebrate d´amitié, friendship, love with your partner, and to show love to the most beloved people around us. I hope to receive a little gift from my beau Alejandro Guillermo Lozano Artolachipi too!.
We will start today with the theme Value Chain Analysis (VCA). I would like to cover today the introduction basic concepts of this framework model, its origin and how it all started with this tool. Over the next days, we will go from the basics to more complicated concepts and examples. I do hope by the end of Leg 6 when we arrive finally to Auckland, we have sown the awareness of the importance of this tool for our beautiful businesses analysis. In addition, I would like to express my thankfulness to Michael Porter for writing the book “Competitive Advantage” in 1985. He did a wonderful job then, which has evolved over the last 33 years to a new concept called “Shared Value Chain”. In 1985, Porter´s book introduced the concept of Value Chain, and this tool has been with us since then. Of course, the Value Chain Concept has also evolved and transformed by the big consulting firms to these days, and we will have enough time to expand on the updated ramifications of it.
Before showing you our slides for today, I wish to differentiate: The Value Chain Analysis is not the Supply Chain Analysis. Many people get confused because the rationale behind both models is very similar, but are not the same thing. Supply Chain addresses issues of logistics and flow of materials, the flow of information, flow of financing for our beautiful businesses. In the supply chain/logistics domain, the focus is on questions such as: How do we become more efficient?, How do we become more sustainable over time? How do we reconcile sometimes competing for objectives such as efficiency and resilience?. But I won´t dedicate Leg 6 to Supply Chain. OK.
Value Chain Analysis or (VCA) our subject of this Leg 6, focuses on:
Who gets the value in the chain of our beautiful business activities,
Who creates value?
Who captures the value?
Where is the value created?
How do you align all the Value Creator Features in a coherent manner?
How we can change the competitive landscape, and change our competitive advantage, through the design of our entire end-to-end value chain?.
Another way to think of the distinction: Supply Chain refers to the integration of all activities involved in the process of sourcing, procurement, conversion, and logistics. On the other hand, Value Chain implies the series of business operations in which utility is added to the goods and services offered by the firm so as to enhance customer value. We will understand these key differences in the process of Leg 6. I promise to retake this subject at the end, in the summary and conclusions block.
Let´s start with what I think it is the rationale behind the Value Chain Analysis.
“The firm or any company can create value for the customer by increasing the utility of the product (by offering features which are perceived as superior), by lowering the price or by cutting other ownership costs”. This fundamental phrase is the key to understand the concept of “creating value”, and we will start from here. Please follow the next slides:
If you wish to download the last set of slides, click here: Eliescalante Leg 6 The Value Chain ANalysis a 09 Feb 2018.
Tomorrow Saturday we will continue sailing. We have a lot to cover, and I wish to simplify this topic as much as I can because many of the mistakes I have seen in businesses leaders and non-profit representatives are related to the wrong application of the VCA Porter framework. Remember if we don´t understand the basics, it is impossible to apply it well.
Blessings and thank you so much.
14:35 pm – San Salvador.
Disclaimer: The content and presentation slides shown on this blog are prepared by me. Nevertheless, all the pictures or videos shown on this blog are not mine. I do not own any of the lovely photos posted unless otherwise stated.
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