1. Research and Development

2. Design of Product or Service

3. Production of the Product

4. Marketing`

5. Distribution

6. Customer Service/Support

 Value Chain Analysis - Basic Approach

1. First task is to identify all activities being performed and what they cost.Use activity based costing to develop this information.

2. See if any activities can be eliminated i.e. non value

3. Take high cost activities and see if they can be done at a lower cost. 

4. Consider outsourcing of some of the activities being performed.Perhaps some parts can be bought at lower cost and/or use outside delivery service rather than maintaining your own.

Currently this is a widely used cost reduction approach motivated by a need to meet competitive prices.

Profitability increase strategy sometimes features that customers value can be enhanced enabling a higher price to be charged.  (Planned periodic product updating.) 

Value Analysis should be as part of planning for the production of new products or services.

Related Problems