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Value Chain

Value Chain. Firm infrastructure. Human resource management. Support Activities. Technology development. Procurement. Margin. Inbound logistics. Operations. Outbound logistics. Marketing & sales. Service. Primary Activities. Board Functions Matrix.

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Value Chain

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  1. Value Chain Firm infrastructure Human resource management Support Activities Technology development Procurement Margin Inbound logistics Operations Outbound logistics Marketing & sales Service Primary Activities

  2. Board Functions Matrix Key Result Areas (KRAs) Suggested % of board time dedicated to Key Result Areas Strategy and Direction  40% Key Projects & Communication  20% Risk Management & Compliance  15% Key Performance / Predictive Indicator (KPI)  15% Knowledge, Skills & Experience Mix  10%

  3. Political • Government stability • Taxation and trading policy • Foreign trade regulations • Social welfare policies • regulatory bodies and • processes • Technological • Government spending on • research and development • Government and industry • focus on technological effort • New discoveries/developments • Speed of technology transfer • Intellectual property issues • Economic factors • Business cycles • GMP trends • Interest rates • Money supply • Inflation • Unemployment • Disposable income • Legal • Competition law • Employment law • Health and Safety • Product safety The Organisation • Sociocultural factors • Population demographics • Income distribution • Social mobility • Lifestyle changes • Attitudes to work and leisure • Consumerism • Levels of education • Environmental • Environmental protection laws • Waste disposal • Energy consumption • Carbon trading

  4. BCG Product Portfolio Matrix Reallocates Resources High Question Mark Stars Growth Cash Cow Dogs Low Market Share Low High Type of Business Description How Resources Should be Moved Question Mark Has low current performance but high potential Use resource to build into a star Pet Has low current performance and low potential Exit this business Cash Cow Cash cow has high current market share and usually cash flow associated with it but is not likely to grow in the future Use the money generated for stars and question marks Star Has high performance and high potential Keep investing in this

  5. More concrete, Easier to change Process Structure Technology Structure Organisational Structure Motivation Structure Measurement Systems Management Methods Strategic Direction More difficult to change, Less concrete Organisational Culture Political Power Individual Beliefs Don’t forget strategic alignment The aim of any good strategy is to first set the strategic direction and then ensure that all the other nine dimensions are aligned so that they are pushing in the same direction. If any of the dimensions are not aligned they will become barriers.

  6. Balanced Scorecard • Makes strategy operational • Focuses organisation on breakthrough performance • Integrates corporate programmes • Can be broken down into lower levels • Links KPIs to strategy • Facilitates strategic feedback and learning

  7. Customer Strategy Learning Balanced Scorecard - BSC Financial Processes

  8. BSC example of common measures

  9. How to construct a balanced scorecard • Establish objectives • Decide who will be involved in the development process • Decide on the organisation unit to which the scorecard will apply • Decide on the structure • Review existing measures to see if can be turned into KPIs • Develop additional KPIs • Relate all KPIs back to original objective • Finalise the scorecard

  10. Three types of performance measures • Key result indicators Tells you what you have done • Performance Indicators Tell you what to do • Key Performance Indicators Tell you what to do to increase performance dramatically

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