Value Chain Analysis


The term value chain describes a way of looking at a business as a chain of activities that transform inputs into outputs that customers value. Customer value derives from three basic sources: activities that differentiate the product, activities that lower its cost, and activities that meet the customer’s need quickly. Value chain analysis (VAC) attempts to understand how a business creates customer value by examining the contributions of different activities within the business to that value.

VCA takes a process point of view: it divides (sometimes called disaggregates) the business into sets of activities that occur within the business, starting with the inputs a firm receives and finishing with the firm’s products (or services) and after-sales service to customers. VCA attempts to look at its costs across the series of activities the business performs to determine where low-cost advantages or cost disadvantages exist. It looks at the attributes of each of these different activities to determine in what ways each activity that occurs between purchasing inputs and after-sales service helps differentiate the company’s products and services. Proponents of VCA believe it allows managers to better identify their firm’s strengths and weaknesses by looking at the business as a process—a chain of activities—of what actually happens in the business rather than simply looking at it based on arbitrary organizational dividing lines or historical accounting protocol.

Judgment is required across individual firms and different industries because what may be seen as a support activity in one firm or industry may be a primary activity in another. Computer operations might typically be seen as infrastructure support, for example, but may be seen as a primary activity in airlines, newspapers, or banks.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Why Segment Markets?


Marketing executives must “psych out” the consumer market. This means identifying prospective customers (the target market), shaping a product to their needs, and then bringing customers (demand) and products (supply) together.

But since all customers are not the same, it is necessary to divide them into market segments, meaningful buyer groups for a specific product or service.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Mergers and Acquisitions


Regardless of what form a business takes—be it a sole proprietorship, partnership, or a corporation—the chances are reasonably good that its form will evolve over time. Companies of all sizes and types achieve a variety of objectives by merging, dividing, and restructuring. The terms most often used to describe all of this activity are mergers, acquisitions, and leveraged buyouts. The difference between a merger and an acquisition is fairly technical, having to do with how the financial transaction is structured. Basically, in a merger, two or more companies combine to create a new company by pooling their interests. In an acquisition, one company buys another company (or parts of another company) and emerges as the controlling corporation. The flip side of an acquisition is a divestiture, in which one company sells a portion of its business to another company. In leveraged buyouts one or more individuals purchase the company (or a division of the company) with borrowed funds, using the assets of the company they’re buying to secure (or guarantee repayment of) the loan. The loans are then repaid out of the company’s earnings, through the sale of assets, or with stock. Leveraged buyouts do not always work.

Mergers and acquisitions represent relatively radical ways in which companies are combined. On a more modest scale, businesses often join forces in alliances to accomplish specific purpose. In a joint venture, two or more companies combine forces to work on a project. The joint venture may be dissolved fairly quickly if the project is limited in scope, or it may endure for many years.

A consortium is similar to a joint venture, but it involves the combined efforts of several companies. Cooperatives also serve as a vehicle for joint activities. In a cooperative, a group of people or small companies with common goals work collectively to obtain greater bargaining power and to benefit from economies of scale. Like large companies, these cooperatives can buy and sell things in quantity; but instead of distributing a share of the profits to stockholders, cooperatives divide all profits among their members.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Organizing


Rarely are individuals in an organization able to achieve common goals without some form of structure. Organizing is the structuring of resources and activities to accomplish objectives in an efficient and effective manner. Managers organize by reviewing plans and determining what activities are necessary to implement them; then, they divide the work into small units and assign it to specific individuals, groups, or departments. As companies reorganize for greater efficiency, more often than not, they are organizing work into teams to handle core processes such as new product development instead of organizing around traditional departments such as marketing and production.

Organizing is important for several reasons. It helps create synergy, whereby the effect of a whole system equals more than that of its parts. It also establishes lines of authority, improves communication, helps avoid the duplication of resources, and can improve competitiveness by speeding up decision making.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Truth and Reconciliation in Business


Truth and reconciliation in business without consistent, decisive, action will rapidly turn into a nightmare. Decisions and actions must be swift and if relationship mapping is to be engaged, it must be engaged fast and directly connected to the truth and reconciliation in business exercise.

Communication will be at an absolute premium and there are several points that the exercise must deliver on. Truth and reconciliation in business must:

  1. Lift the lid on silence and denial;
  2. Give everyone within the organization the chance to have their grievances heard and their ideas listened to;
  3. View the organization as one entity, not separate entities with different expectations and responsibilities. Everybody involved must be equally responsible and accountable for all outcomes and there can be no splintering into different groups, as this will set the seed for different sub-cultures to grow back;
  4. Accept the principle of mutual shared responcibility for any previous shortcomings of the organization.
  5. Encourage the building of a new social network that straddles previous divides, and delivers ongoing dialogue and interaction across every dimension of the organization;
  6. Determine what is negotiable and what is non-negotiable; and
  7. Make clear recommendations for the future, start to define responsibilities, expectations and desired relationships, start the process of reform, and begin to define a working culture for the organization as a single entity.

Engaging in Truth and Reconciliation in business is a great start for any organization looking to develop amazing relationships and enjoy amazing success, but it is only the start of the process. Organizations must be able to maintain what they have started.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Slide Presentation


If you’re considering using a visual aid or requesting that someone else use a visual aid as part of his or her presentation, realize that any visual aid should be used to complement the speaker’s presentation, not cause the listener or viewer to divide his attention between the two. Visuals, particularly slides, are often used as crutches. They are also habit forming. They take the place of notes, and the presenter counts on them to keep him on track. They control him rather than the other way round.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight.

Calculating Market Share


Market share is the ratio of the competitor’s annual sales to the total annual sales of competitive products in the market being served by the competitors. It is usually measured by dividing the  competitor’s sales in dollars by the total sales volume in dollars for the industry. Dollars are used in the calculation because monetary value is usually easy to obtain.

As may be seen from the dimensions describing the horizontal axis of the economic experience curve. It would make more sense to measure the market share in units sold during the year. Dollar volume does not double when volume in units shipped doubles if price decreases with experience.

The dimensions of the experience curve are fully allocated unit expense in constant dollars and cumulative number of units produced. The reference to doubling sales is measured in units shipped. Because this kind of measure could be counted off on the horizontal axis of the curve, it is possible to relate the growth in shipments to fully allocated expense in constant dollards, a reasonable profit margin, and the resulting dollar volume of sales.

The difficulty in obtaining the information needed to calculate market shares in terms of units shipped is often resolved by trade association data, which reports in both units and dollars. Still the associations may not include every possible competitor among their membership. In almost all cases, however, the non-members are not big enough to be significant. Even without the non-member data, the trade association information is a good approximation to the actual figures.

Given that sufficient data is available, it is not entirely necessary to know a competitor’s exact market share. The information most meaningful to a manager is market share compared to that of the nearest competitor. This gives rise to the concept of a market share ratio.

A proposed ratio that has special meaning when used in conjunction with the economic experience curve. The ratio may be best understood as:

Market Share Ratio =   Your Market Share __________

Market Share of Your Biggest Competitor

The interesting result of defining the ratio this way is that only one competitor has a ratio greater than one. All the others have functional ratios, less than one. For instance, if you the largest market share your biggest competitor will have a smaller share than you, and your ratio will be a number greater than one. If your biggest competitor has a market share larger than yours, your ratio will be less than one.

Because only one competitor has market share ratio greater than unity, the dominant competitor is identified by a number greater than one. Also, the degree of the biggest competitor’s dominance is indicated by the size of the number.

Typically, when a new business concept arises that can be represented by an economic experience curve, several competitors enter the marketplace within a very short span of time. There is an initial market penetratiuon in which market shares are established. Managers have learned how difficult it is to change the market share of the competitors once they have been established. Market shares among suppliers who are competing forcefully tend to remain reasonably constant. Cummulative experience relative to other competitors tends to be aligned with the market share ratios.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Value Stream Management


The value stream management method is a strategic and operational approach designed to help a company or complete supply chain achieve a lean status. It has its antecedents grounded in the Value Stream Mapping approach but seeks to overcome some of the problems and drawbacks of this earlier approach. Value Stream Management also incorporates various education and policy deployment stages to make it a far better basis for ongoing company or supply chain development. The new approach can be divided into individual and consecutive stages.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Markets as Networks


Actual firm relationships must be seen on a spectrum between outright competition at one end and collusion at the other. At the very least, such a self-evident observation raises the issue of the firm (or business unit) as the basic, and often only, unit of analysis: in certain circumstances we might more appropriately consider an information coalition of such firms as the key unit.

Earlier, the border of the company was seen as the dividing line between co-operation and conflict – cooperation within the company and conflict in relation to all external units. The corresponding means for coordination are heirarchy and the market mechanism. The existence of relationships makes this picture more diffuse. There are great opportunities for cooperation with a lot of external units forming, for example, coalitions. Thus, it is often more fruitful to see the company as a part of a network instead of a free and independent actor in an atomistic martket.

However, the recognition that there is a network of relationships is merely the first step. Approaches need to be developed for the analysis of the network.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Musts and Wants


Divide the objectives into two categories: Musts and Wants. The Must objectives are mandatory: they must be achieved to guarantee a successful decision. When the time comes to assess alternatives against our objectives, any alternative that cannot fulfill a MUST objective will immediately drop out of the analysis. These objectives must be measurable because they function as a screen to eliminate failure-prone alternatives. We must be able to say, “This alternative absolutely cannot fulfill this objective; it cannot meet a requirement that is mandatory for success.

All other objectives are categorized as WANTS. The alternatives we generate will be judged on their relative performance against WANT objectives, not on whether or not they fulfill them. The function of these objectives is to give us a comparative picture of alternatives—a sense of how the alternatives perform relative to each other.

A WANT objective may be mandatory but cannot be classified as a MUST for one or two reasons: First, it may not be measurable. It cannot, therefore, give us an absolute Yes or No judgment about the performance of an alternative. Secondly, we may not want a Yes or No judgment. We may prefer to use that objective as a relative measure of performance.

An objective will be stated frequently as a MUST and then be rephrased as a WANT so that it can perform both functions. The MUSTs decide who gets to play, but the WANTs decide who wins.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Previous Older Entries Next Newer Entries