VALUE CHAIN ANALYSIS

&
BENCHMARKING

PRESENTED BY
SHRABANI NAYAK
DILLIP KHUNTIA
VALUE CHAIN ANALYSIS

It describes all the activities that make up
the economic performance & capabilities
of the firm.

Propounded by Michael Porter
ACTIVITIES IN VALUE CHAIN
ANALYSIS
• PRIMARY:
PRIMARY
Activities directly involved in transfer of
raw materials into consumer benefits

• SUPPORT:
Activities that provide support to the
effective performance of the primary
activities in the value chain.
 PRIMARY ACTIVITIES
• Inbound logistics

• Operations

• Outbound logistics

• Marketing and sales

• Service
 SUPPORT ACTIVITIES
• Procurement

• HR Management

• Technology
Development

• Firm infrastructure
VALUE CHAIN
 The Value Chain System

Supplier Firm Channel Buyer

…. Value Value Value Value
Chain Chain Chain Chain
 ADVANTAGES

Value creation

Identifying weak points

Tool for strategic planning

Secure Competitive advantage
 D LL COMPUTERS

Founded by Michael Dell in 1984

The concept: Selling computers

directly to customers

Designed and built the first

computers of its own design

One of the first computer

companies to send technician to
homes to service computers
 VALUE CHAIN ANALYSIS OF DELL

• JIT manufacturing approach to reduce cost

• Direct selling removes intermediaries
• Low inventory is signature of Dell business model
• Brands its Service Agreements at five levels for its
customers
• Lower prices, bonus products & shipping facilities
provided to customers
 PIZZA HUT
• Flagship brand of Yum Restaurants Inc.
• Started in the year 1958
• World’s largest pizza chain : 13000 outlets in 91
countries
• Entered India in 1996
• Known for Quality, Innovation & Category
leadership
 VALUE CHAIN OF PIZZA HUT
• Follows C.H.A.M.P.S norms for value creation.
• Economies of scale
• Morzella cheese imported from Spain & Australia
• Outlets maintain inventory stock for only 3 days.
• HP solutions
• Partnership with brands like Nestle & Coca cola.
• Provides Jain menus & Magic meals
• Pizza Hut call center
 BENCHMARKING
It is the process of comparing one's business
processes and performance metrics to
industry bests and or best practices from
other industries.
 NEED FOR BENCHMARKING

Competitive pressure

Response to market trends

Maximising key drivers

Motivational tool

Realistic tool
 TYPES OF BENCHMARKING

Product Benchmarking

Competitive Benchmarking

Process Benchmarking

Strategic Benchmarking

Global Benchmarking

Financial benchmarking

Investor’s perspective
Benchmarking

Internal Benchmarking

External Benchmarking

Best practice
Benchmarking
PROCESS OF BENCHMARKING
MATURITY

ACTION

INTEGRATION

ANALYSIS

PLANNING
 BENEFITS

It helps overcome “Paradigm Blindness”

Opens to new methods, ideas and tools to
improve effectiveness.

It helps crack through resistance to change.

Prevents companies from being industry led.
Benchmarking of Xerox Corporation

Photocopier Machine Producer

1970’s, severe erosion of its market by cheaper
Japanese model of Photocopier.

Benchmarking of that product by Xerox.

1981, From L.L. Bean, warehousing.

From Drug Wholesaler: Better Electronic Order
between Stores and Distribution Centre.
• From Electrical Components Manufacturer:
Automatic, in-line weighing, barcode labeling
and Scanning of Packages.
• From American Express: Billing and Collection
Procedure.
• A Competitive Benchmark with Canon
produced a new Cylinder for a Copier
Photoreceptor.
• Xerox Benchmarks - Fuji Xerox (Japan)