Value Chain shows a process adding value in each step from law materials to consumption by end users.
By Value Chain analysis, the company can find which stage in a business process contributes to establish competitive advantage compared with other companies. Value Chain also tells us KSF.
Image of Value Chain is as follows.
Form of Value Chain should be changed by business process.
Examples of Value Chain
Further example of Value Chain
Value Chain can be applied to not only one company but also industrial process like law materials firm, production firm, delivery firm, sale firm and consumers.
Break down industrial process to detailed process of a company
How to make and use Value Chain
Specify main steps
Firstly, main steps of a business should be clarified roughly
Divide important step into details
Key step should be divided into more detailed steps. Key step means a step contributing differentiation or a step needing higher cost than other steps.
Analyze strengths and weaknesses of both company and competitors.
After clarifying several important steps, the company should analyze how different they are between company and competitors and whether its differentiation meet KSF of the industry.
Value Chain of electrical equipment industry is sometimes called Smile Curve because its added value is parabolic in shape.