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There was a question concerning Value Chain Analysis on yesterday’s APM, and I please need what the best approach should have been. It was a manufacturer of washing machines, competing Internationally with six other big organizations. It was a cost leader and used ROCE as a KPI. It won innovation awards, and manufactured a washing machine that kills germs- this was well received. Provided very good installation and after-sales service. They had very reliable products. The question was to discuss the value chain for this company. I am still lost as to an approach. My confusion was this – I felt they were not being consistent. should I cost leader be producing washing machines that kill germs? Then I thought even a cost leader should have minimum reliability levels. Then I was not sure of the approach anymore
I think I would have gone through each element of the value chain and see if I could say something about how the organisation used that process to create value.
For example, technology development seems to have played an important part in the company’s success (awards, well-received). Service is also good and adds value to the company’s proposition.
Cost leader OR differentiator and innovator are not necessarily mutually exclusive, but are difficult to achieve simultaneously. If they are, then the company will be in a strong position. For example, Amazon often manages to sell products very cheaply and is very innovative. However, most companies flip to one or the other.
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