Leg 6. From Hong Kong to Auckland (IV). Value Chain Analysis basic terms.
Hello to all of you. It is Sunday and it is a beautiful day here. As far as my six boat competitors at the Volvo Ocean Race 2017-2018, it was very interesting to see how all of them decided to push well to the north in order to then turn to the south. In addition, the fleet was split in two, reflecting differing tactical choices. The first group with MAPFRE holding the narrowest of leads over Dongfeng Race Team, Team Brunel, and Turn the Tide on Plastic just miles behind. The second group with AkzoNobel and Scallywag decided to turn to the North in a different route.
At this point, all the fleet has turned again to the south. MAPFRE is leading. The following step for all will be to “negotiate the doldrums and push into the tradewinds that will carry them to Auckland”. We can see their route tactics in the following tracker snapshot:
In business, each company who belongs to the same industry can choose its own value chain. It is not possible to have two companies with same value chains, simply because each of the sources of value explained in their activities are different. The fleet split in two by trying to differentiate themselves from the rest and gain some competitive advantage. In Sailing, the wind velocity is very important, and the fleet always looks for routes where the ocean conditions offer more knots to sail fast. Returning back to the VCA, the whole idea of Porter by gifting us his Value Chain Analysis (VCA) Framework was to help us to understand this in each category of the Value Chain. Each of the nine elements of the value chain can be a source of differential advantage. When we understand, each firm has a different value chain, and to those of their competitors, it is easier to comprehend why the concept of VALUE for customers is the trigger for more or less successful results.
Let´s continue sailing in our strategy ocean. We want to understand the basics of this topic. And so forth we have to start by understanding the terms used in the VCA framework. All this material is from the book of Michael Porter “Competitive Advantage, Creating and Sustaining Superior Performance”.
If you wish to download the last set of slides in PDF, click here: Eliescalante Leg 6 The Value Chain Analysis b 11feb2018.
Next post will be critical for all of us. We will define the VCA. We will begin with the VCA general methodology approach. “A company’s value chain is typically part of a larger value system that includes companies either upstream (suppliers) or downstream (distribution channels), or both. This perspective about how value is created forces managers to consider and see each activity not just as a cost, but as a step that has to add some increment of value to the finished product or service“. By far, the VCA Framework is one of the greatest pieces of art from Porter. He did a beautiful job then, which has evolved beautifully over 33 years. We will start with his original and precious model first (published in 1985).
This is all for today. Before we will get stuck at the Doldrums in our route to New Zealand, we will have to race faster. Alejandro Guillermo Lozano Artolachipi…. We will have to race faster if we wish to surpass MAPFRE team again.
Thank you. Blessings and Bonne Nuit.
19:00 pm – San Salvador
Source Reference:
https://www.hbs.edu/faculty/Pages/item.aspx?num=193
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.
Eleonora Escalante Strategy 