Value Chain Analysis

Advanced Certification Course

7

Perform competitive cost analysis based on the Value Chain framework and give your management in-depth numerical insights on its competitive (dis)advantage.

FACULTY: GILAD 0.7 CEU CREDIT

November 19

Many managers think of competitive advantage in terms of SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Yet SWOT is subjective, generic, and quite often misleading in its conclusions. Relying on SWOT to make strategic decisions is like relying on poetry to calculate profits. Some executives and consultants use income statement and balance sheet analysis to understand a company position vis a vis its competitors. This is as bad as using SWOT, since consolidated financial statements do not tell the full story, the right story or even the relevant story. The proper way to assess competitive advantage is through a strategic Value Chain Analysis (VCA).

Managers think of value chain analysis in two different ways: an analysis across an industry chain – from suppliers to competitors to distributors and buyers in a given industry. This type of analysis has been covered in great detail in the Competitive Blindspots course. In this course, value chain analysis refers to the strategic analysis of a chain of activities performed by a company – be it your company or its competitors – which produce specific value to customers at a specific cost. Understanding the value chain of a competitor means accurately understanding its source of competitive advantage (or disadvantage), its relative cost structure, and its unique strategic positioning.

Management often asks its CI analysts to explain a competitor’s competitive advantage. What do they do better? What do we do better? A firm needs to constantly guard its competitive advantage against competitors’ improvements in their activity chain, and CI managers must be at the forefront of that fight.

This case-based seminar will teach participants to:

• Understand the real strategic differences in value chain activities between their company and competitors
• Estimate competitors’ cost positions
• Use differences in activities to understand why and where competitors’ strategies differ from their company’s strategies
• Understand why large differences in profitability are sustained within the same industry
• Learn a framework to put a “bottom line” number on “added value” rather than an ambiguous marketing spin
• Identify major cost drivers for competitors’ advantage
• Understand the precise nature and sources of competitive advantage and disadvantage
• To know which benchmarking has a chance to succeed and which is just a waste of money

A NOTE TO PARTICIPANTS

To gain the greatest benefit from this course, please be sure to review the case material in advance.