Leg 6. From Hong Kong to Auckland (XI). Value Chain Analysis: Every pro has its con!
“Every pro has a con and most cons have some pros”.
As everything in life, the Value Chain Analysis framework has many pros but also has cons. Advantages of using the tool are innumerable. Disadvantages are also an inherent part of using it too. Today´s post is about the Advantages and Disadvantages of using the Value Chain Analysis. We are moving with the wind!
Our 6 teams are also closer to New Zealand. Here are their current positions. It seems some teams have decided to move closer to Australia (to the west). These teams are Akzo Nobel, Scallywag, and TTOP. On the other hand, the rest of the fleet is a bit east (Mapfre, Dongfeng, and Brunel). Let´see how the rest of the teams’ decisions will evolve over the next days. As usual, the navigators are looking for better conditions of wind. Different routes, different sailing strategies.
Let´s start with the topic of today:
If you wish to download the last set of slides in PDF Format, Click here: Eliescalante Leg 6 The Value Chain Analysis H 24feb2018.
When writing about today´s subject, I thought this is not an easy task. Why? Because in order to provide the basics to you, I decided to use a book which was written in 1985. There are more than 1 million publications (books, research papers, magazine articles, educational reports) about the VCA. The world has changed a lot during the last 33 years, and that also means the Value Chain Analysis (VCA). But when we will crunch the numbers of the Cheesecake Factory, you will find why I stuck to the “core” of Porter´s theory from that time. It is always good to go to the roots when doing VCA because the fundamentals will always be the same. The VCA is a tool, is a framework which is filled with information and data. The quality of the VCA depends on how we fill it with information, and if the information used is reliable and accurate at the internal level, at the industry level, at the suppliers level, at the distribution channel levels and ultimately at the buyer´s value chain level. In addition, to do a VCA without understanding why is used, and without understanding the buyers is really useless. 
The buyer´s value chain triggers innumerable ideas about innovation and how to be different with our products and services value propositions, and business models. Traditionally, many strategists try to understand the clients’ value chain based on the information provided by marketers, who have been used to rely on surveys, polls and focus groups. Merely observation can lead to mistakes. Surveys and polls can lead to horrendous mistakes because clients sometimes divert their true data for the sake of protecting their true feelings or thoughts, and sometimes buyers are smarter and play tricky strategies to deny true data. Surprise, later on, the results are completely different. Recently, polls and surveys used to understand clients have given incorrect paths. With the social networks, companies are expecting to use the “trustful” information from our daily life with the purpose to refine the buyer´s value chains too. The bottom line: accurate and trustful information is the key when applying strategy frameworks and everything else in life.
Ok. This is all for today. On my next post (which I hope to upload tomorrow), we will carefully see some of the ramifications of the Value Chain Analysis (the most important ones at least). In addition, we will see how one consulting company has proposed to include the digital new aspects of our current life in the Value Chain Analysis. We will also see the Shared Value Chain. A lot to accomplish, but we can´t stop to sail right now. I don´t want to be the last team arriving in New Zealand.
Thank you. See you soon!
12:27 pm – San Salvador.
Source References and Additional Bibliography:
http://www.simonandschuster.com/books/Competitive-Advantage/Michael-E-Porter/9780684841465
http://www.simonandschuster.com/books/Strategy-Safari/Henry-Mintzberg/9780743270571
Disclaimer: All the presentation slides shown on this blog are prepared by Eleonora Escalante MBA-MEng. 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 