Value Chain Analysis – This business value analysis tool, developed by Michal Porter, has been in use in use for a long time, but the fundamental concept is important and not obsolete. The basic point is that businesses deliver their value to their customers through a coordination of multiple value added activities traditionally ranging from inbound logistics, to operations, to R&D, to outbound logistics, to marketing and selling to services and more (or with different value chain functions for the many different business models). These primary activities provide one part of the value equation, and other support activities, such as infrastructure, resource management, technology development, procurement and other functions provide the rest of the picture. While I do not use Value Chain Analysis heavily, it is very important that as you look at the value chain for your business, you can clearly see what is different, valuable, and unique about your structure, and you also clearly see that your structure aligns with your strategy to be the market leader, or best cost provider, or the best at customer intimacy or whatever your strategy is. In the end, to win in the market, you need to have a value chain and an associated value proposition that is differentiated and important to your customers. You should be able to readily identify your differentiation and your planned “unfair advantage” in this analysis.
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