Professional Documents
Culture Documents
COURSE OUTLINE
The Support value chain activities Firms infrastructure Human resource Technology development Procurement
Suppliers value chain Distributors value chain Buyers value chain Competitors value chain
Linkages within the value chain of the firm Vertical linkages linkages with suppliers and channels Linkages with buyer
Segment scope Vertical scope Geographic scope Industry scope Coalitions and scope
Vertical integration Core competencies Supply chain management Value chain management
VCM incorporates Integrated supply chain planning Full resource management Chain wide resource responsiveness Information integration
Organizational processes
Leadership Employees & human resource
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Step-1. Indentify core transactions of value chain in target sector Step-2. Identify and map key market players Step-3. Identify opportunities and constrain at each value chain level (qualitative information) Step-4. Identify quantitative information for each value chain level
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Step-1. Indentify different markets for product / service Step-2. Indentify the way by which product & service reach end users Step-3. Display information and characteristics of service market channels
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Differentiation
Focus
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competitive advantage
Cost advantage and the value chain
Cost analysis Cost behavior Cost advantage Steps in strategic cost analysis Pitfalls in cost leadership strategy
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Differentiation and the value chain Source of differentiation Cost of differentiation Buyer value and differentiation Steps in differentiation strategy Pitfalls in differentiation strategy
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Focus strategy and the value chain Industry segmentation Segment inter relationship
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DEFINITION OF VALUE
The Firms Perspective
Value is determined by the difference
between the price at which the firm sells its product or services and the cost of producing these product or service.
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DEFINITION OF VALUE
Value = Selling price of product or service less total cost of product or service.
If the price at which the product or service are
being sold exceeds the cost of producing these product or service the firm is considered to be making a margin on its products or services and is said to be profitable.
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MARKETING ARITHMETIC
RELATED TERMS
Fixed cost Variable cost Contribution Unit contribution Profit Loss Break even Market share Margins Return on investment ( ROI ) price, cost & investment Supply & Demand Share value
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FIGURE 1-1
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FIGURE 1-2
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RIVALRY DETERMINANTS
Industry growth Fixed (or storage) costs / value added Intermittent overcapacity Product differences Brand indentity Switching costs Concentration and balance Informational complexity Diversity of competitors Corporate stakes Exit barriers
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ENTRY BARRIERS
Economies of scale Proprietary product differences Brand identity Capital requirements Access to distributions Absolute cost advantages
Proprietary learning curve Access to necessary inputs Proprietary low-cost product design
Price sensitivity Price / total purchases Product differences Brand identity Impact on quality / performance Buyer profit Decision makers incentives
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Supplier concentration
Importance of volume to supplier Cost relative to total purchases in the industry Impact of inputs on cost or differentiation Threat of forward integration relative to threat of
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DEFINITION OF VALUE
The customers perspective
Beauty lies in the eyes of the beholder The value equation
V=Q+F/P V= Customer Value Q= Product/service quality as perceived by the customer F= Product/service features valued by customer P= Price of product/service to customer
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Conformance
Durability Serviceability
Aesthetic
Perception
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What is a product
Product attributes
What is a service
Dimensions of service
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COMBINING
The firms perspective of value and The customers perspective of value to Create and sustain a competitive advantage
Achieve a quality and cost combination of value that maximizes both the customers benefits and firms profitability
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potential
sources
of
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competitors (differentiate)
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inbound & outbound logistics operations / outbound logistic non-existent marketing & sales service
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to transform them into finished services Adds value by the acquisition of goods or services at the best price, time and in the desired place with quality and quantity
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plan and objectives Designs work positions by hiring, recognition, rewards, appraisal systems, career, planning and employee development Motivation Create congenial working environment
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Required to perform value activities efficiently and includes following functions Planning management Legal framework Financing Accounting Public affairs Quality management General management
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suppliers value chains Channel value distributors value chains Buyers value chains Competitors value chain
To attain and sustain competitive advantage it is
essential to have clear understanding of not only our own value chain but also how the firm is positioned in the overall value system
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activity is performed and the cost or performance of another activity Linkages lead to optimization and coordination Linkages between support activities and primary activities Pitfalls
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VERTICAL LINKAGES
Linkages between the firms & suppliers value chains
Product or service from supplier employed by the firm in its value
chain Firms procurement and inbound logistics activities interact with suppliers order entry system (output)
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value chain and buyers value chain Establish how the firms product is consumed in the particular buyers activity.
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Industry scope
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segment requires differences in value chains Leads to competitive advantage through focusing strategy
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Defines division of activities between a firm and its suppliers channels/ distributors and buyers
Purchase components instead of fabricating Contract for service instead of having a service department
Channels may perform many distributions, service and marketing functions instead of the firm
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GEOGRAPHIC SCOPE
Allows the firm to share or coordinate value activities
used to serve different geographic areas National and regional co-ordination of value chains Enhances value and creates competitive advantage if sharing value activities reduces cost or enhances differentiation
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INDUSTRY SCOPE
Potential inter relationship among the value chains
required to compete in related industries Sharing logistics system or a common sales force of related products can lower cost & create differentiations
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broader scope without broadening the firm Vertical coalition Horizontal coalition
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