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VALUE CHAIN
Group presentation students: B:11 – G: A Instructor : Dr. Ali
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November 2015
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:Group Members2 - 3
*Mohammed kamal Eldin Mohammed.*Mustafa Omer Elhassan .*Hassan Adam Yarow.
*Tahir Fikri Tahir .*Khalid Eltigani Abdelrahman .*Ishaq Salih Hussein .
*Alghali Ismail Ishaq.*Ahmed Alsadig Idress .* Hassan Elbashir Musa .
*Mubarak Abubaker Abdallah.
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After this presentation , you should have a goodunderstanding of:How value-chain analysis can help managerscreate value by investigating relationships amongactivities within the firm and between the firm andits customers and suppliers
• Aim of the presentation Value chain2 - 4
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Introduction
value chain analysis
Value chain activities
value of competitive intelligence and Different tools and techniques
how to Develop the value chain
how a firm can use value chain analysis
Value chain system
•Table of ContentValue chain
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Value chain analysis was first suggested by Michael Porter 1985
A value chain is a set of activities that an organization carries out to create value for its customers.
a strategic analysis of an organization that uses value creatingactivities.
To analyze a specific activities through which firms cancreate a competitive advantagethe development of competitive advantage depends not only onthe firm-specific value chain ,but also on the value system ofwhich the firm is apart .
• Introduction :Value chain
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competitive advantage2 - 8
When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantageover its rivals.The goal of much of business strategy is to achieve a sustainable competitive advantage.
Michael Porter argues that there are only two types Of competitive advantage: * Differentiation advantage :providing some kind of unique value to particular customer .
* Cost advantage .
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How does your organization create value?
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By acquiring raw materials and using them to produce something useful. ¨ The value that's created and captured by a company is
the profit margin:Margin=Value Created and Captured – Cost of Creating that Value
The more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage.
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• Value-Chain Activities Value chain2 - 10
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The Formal Elements of Value Chain Analysis 2 - 11
Porter built his value chain analysis model on a manufacturing business – back in 1985 there were many more around in the United States.He split the value chain into two parts:Primary value activities.
Support value activities.
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Primary Activity:2 - 12
Inbound LogisticsØ Associated with receiving, warehousing of raw
materials and their distributing tomanufacturing as they are required
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Primary Activity:2 - 13
OperationsØ Is the process of transforming inputs into the final
product form or service ¤ Efficient plant operations¤ Incorporation of appropriate
process technology¤ Efficient plant layout and
workflow design
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Primary Activity:2 - 14
Outbound LogisticsØ Associated with collecting, storing, and
distributing the product or service to buyers or is the warehousing and distribution of finish goods .
¤ Effective shipping processesto provide quick delivery and minimize damages
¤ Shipping of goods in large lot sizes to minimize transportation costs.
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Primary Activity:2 - 15
Marketing and SalesØ Associated with purchases of products and services
by end users and the inducements used to get them to make purchases¤ Innovative approaches to promotion and advertising¤ Proper identification of customer segments and needs
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Primary Activity2 - 16
ServicesØ Associated with providing service to enhance
or maintain the value of the product¨ The support of customers after the products
and services are sold to them ¤Quick response to customer needs and
emergencies¤Quality of service
personnel and ongoing training
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Support Activity2 - 17
Ø Procurement Ø Function of purchasing inputs used in the firm’s
value chain¤ Procurement of raw material inputs¤Development of collaborative “win-win” relationships
with suppliers¤Analysis and selection of alternate sources of inputs to
minimize dependence on one supplier
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Support Activity2 - 18
Human resource management Ø Activities involved in the recruiting, hiring, training,
development, and compensation of all types of employee ¤ Effective recruiting, development, and retention
mechanisms for employees¤Quality relations with trade unions¤ Reward and incentive programs
to motivate all employees
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Support Activity2 - 19
Technology DevelopmentØ Related to a wide range of activities and those
embodied in processes and equipment and the product itself ¤ Effective R&D activitiesfor process and product initiatives¤ Positive collaborative relationships between R&D and other departments¤ Excellent professional qualifications of personnel
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Support Activity2 - 20
Firm infrastructureØ Includes general and planning management ,legal,
finance , accounting , public affairs , and quality management .
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Value chain system
Ø the series of activities and process as well as the supply of raw materials or needed inputs involved in producing a product or delivering a service.
Backward channel Forward channel
Business Organization
Raw
mat
eria
ls
Supply Chain Distribution chain
CUSTOMERS
Value chain system
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Value chain system 2 - 22
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Five basic tools Strategic analysis
Product –oriented analysis
Behavioural analysis
Financial analysis
Customer oriented analysis ( value chain analysis)
• Different tools and techniques Value chain
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Customer
Information system
Sales and marketing
Customer – oriented value chain
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Competitive intelligence2 - 25
Ø The best way to differentiate your company from the competition .
Ø How you gather , manage, and use information will determine whether you win or lose .
Ø Information about opportunities and threats Ø Leveraging information/knowledge to improve
competitive position of companies and local industries
Ø Actionable recommendation from analysis of the environment
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Market intelligence VS competitive intelligence
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¨ Market intelligence tells:v a company about the marketplacev Supply and demand for its productsv Drivers that influence demandv Who the buyers and suppliers arev Overall economic outlook for the product
¨Competitive intelligencev Helps a company understand what its competitive position is
in a specific market ( weakness and strengths)
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Developing value chain 2 - 27
¨ Value chain analysis requires expertise in more than one area
¨ Competitive intelligence is to be gathered ethically
¨ Developing systematic process for capturing ,analyzing it and disseminating the intelligence and developing the appropriate strategies to enhance your competitors
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how a firm can use value chain analysis 2 - 28
¨ Three useful strategic frameworks have been identified for value chain analysis:
v Industry structure analysisv Core competenciesv Segmentation analysis
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Value chain Analysis2 - 29
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Conclusion : 2 - 30
¨ Value Chain Analysis is a useful way of thinking through the ways in which you deliver value to your customers, and reviewing all of the things you can do to maximize that value.
¨ It takes place as a three stage process:¨ Activity Analysis, ¨ Value Analysis.¨ Evaluation and Planning.¨ By using Value Chain Analysis and by following it
through to action, you can achieve excellence in the things that really matter to your customers.
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