​​Value Chain Analysis; Achieving Excellence in the Things That Really Matter

​

Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers. Value Chain Analysis helps you identify the ways in which you create value for your customers, and then helps you think through how you can maximize this value: whether through superb products, great services, or jobs well done. 

​

​A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter.

Commonly, in business enterprises raw inputs are transformed during the production process into marketable commodities, into something of worth to other people. This is easy to see in manufacturing, where the manufacturer "adds value" by taking a raw material of little use to the end-user and converting it into something that people are prepared to pay money for. But this idea is just as important in service industries, where people use inputs of time, knowledge, equipment and systems to create services of real value to the person being served – the customer.

​

In priciple, the more "added value" your Business Enterprise creates, the more people will be prepared to pay a good price for your products or services, and the more they will they keep on buying from you. Creating a lot of added value, allows Your Business to excel in what You do, which is expected to be rewarded in line with your contribution.

​

A firm's value chain forms part of a larger stream of activities, the value system. A value system, or an industry value chain, includes the suppliers (primary producers) that provide the raw inputs necessary to processing firms (secondary producers) along with their value chains. After these processing firms create products, these products pass through the value chains of distributors (tertiary producers)which also have their own value chains, all the way to the customers. All parts of these chains are included in the value system. To achieve and sustain a "Competitive Advantage", and to support that advantage with information technologies, a Business Enterprise must understand every component of this value system. 

​

In short, in finding out where You, Your team or Your Business Company can create the maximum added value, the "Value Chain Analysis" tool proves very useful. 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. 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. As powerful analysis tool for strategic planning, it assists identify ways and means to gain "Competitive Advantage", allowing Your Business Enterprise to advance and to prosper.  

​
Value Chain Analysis in Practise ​

Value Chain Analysis is a three-step process:
 

1. Activity Analysis: First, we identify the activities you undertake to deliver your product or service;
2. Value Analysis: Second, for each activity, we think through what you would have to do to add greatest value for your customer; and
3. Evaluate Changes and Plan for Action: Thirdly, we evaluate whether it is worth making changes, and then plan for action.  

​

​