value chains and adding value

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Strategic Thinking Stratetic Management Cristin Howell-Vischer, MIMA sequential process of value-creating activities
A categorization of the generic value adding activities of an organization
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Associated with receiving, storing and distributing inputs to the product
Location of distribution facilities
Systems to reduce time to send “returns” to suppliers
Warehouse layout and designs
Efficient plant operations
Quality production control systems
Inbound Logistics
Primary Activities
Associated with collecting, storing, and distributing the product or service to buyers
Effective shipping processes
Shipping of goods in large lot sizes
Quality material handling equipment
Primary Activities
Associated with purchases of products and services by end users and the inducements used to get them to make purchases
Highly motivated and competent sales force
Innovative approaches to promotion and advertising
Selection of most appropriate distribution channels
Proper identification of customer segments and needs
Effective pricing strategies
Primary Activities
Associated with providing service to enhance or maintain the value of the product
Effective use of procedures to solicit customer feedback and to act on information
Quick response to customer needs and emergencies
Ability to furnish replacement parts
Effective management of parts and equipment inventory
Quality of service personnel and ongoing training
Warranty and guarantee policies
Typically supports the entire value chain and not individual activities
Effective planning systems
Ability of top management to anticipate and act on key environmental trends and events
Ability to obtain low-cost funds for capital expenditures and working capital
Excellent relationships with diverse stakeholder groups
Ability to coordinate and integrate activities across the value chain
Highly visible to inculcate (fix in people’s minds) organizational culture, reputation, and values
General Administration
Effective recruiting, development, and retention mechanisms for employees
Quality relations with trade unions
Quality work environment to maximize overall employee performance and minimize absenteeisn
Reward and incentive programs to motivate all employees
General Administration
Human Resource
Support Activities
Related to a wide range of activities and those embodied in processes and equipment and the product itself
Effective R&D activities for process and product initiatives
Positive collaborative relationships between R&D and other departments
State-of-the art facilities and equipment
Culture to enhance creativity and innovation
Excellent professional qualifications of personnel
Ability to meet critical deadlines
General Administration
Human Resource
Support Activities
Function of purchasing inputs used in the firm’s value chain
Procurement of raw material inputs
Development of collaborative “win-win” relationships with suppliers
Effective procedures to purchase advertising and media services
Analysis and selection of alternate sources of inputs to minimize dependence on one supplier
Ability to make proper lease versus buy decisions
General Administration
Human Resource
Two perspectives
The internal analysis of phenomena within a company (SWOT)
An external analysis of the industry and its competitive environment (PEST)
Three key types of resources
Tangible resources
Intangible resources
Organizational capabilities
Types of Resources
Relatively easy to identify, and include physical and financial assets used to create value for customers
Financial resources
Firm’s borrowing capacity
Types of Resources
Relatively easy to identify, and include physical and financial assets used to create value for customers
Tangible Resources
Types of Resources
Difficult for competitors (and the firm itself) to account for or imitate, typically embedded in unique routines and practices that have evolved over time
Human
Trust
Excellent evaluation and control systems
Difficult for competitors (and the firm itself) to account for or imitate, typically embedded in unique routines and practices that have evolved over time
Tangible Resources
Intangible Resources
Types of Resources
Competencies or skills that a firm employs to transform inputs to outputs, and capacity to combine tangible and intangible resources to attain desired end
Outstanding customer service
Ability to hire, motivate, and retain human capital
Tangible Resources
Intangible Resources
Organizational Capabilities
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Adding Value
Adding value means making the customer feel like they are getting real value for their money. This can happen by/through:
understanding and being close to the customer
committing to quality
reacting speedily to competitive opportunities and threats
constant innovation
airlines (mix of offerings in seat choices)
taking away features seen as a nuisance (handy features)
services (grocery delivery)
ambience/lifestyle (Starbucks)
people (exploiting expertise, encouraging innovation)
finance (globalization of financial markets, better use of assets)
information (exploiting the potential of information technology)
acquisition and restructuring strategies
According to Dr. David J. Skyrme
Establish the Strategic Role of Information
Identify Users Real Needs

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