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    Industry Analysis and Mapping: The Business System / Value Chain

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    mecaunidos7771
    The document discusses industry analysis and mapping using the concepts of value chains and strategic groups. It provides examples of how different companies compete based on either low delivered cost by focusing on process or high perceived value by focusing on product. Examples are given from industries like watches, PCs, packaging equipment, chain saws, and automobiles to illustrate strategic groups and how industry maps can change over time.

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    Industry Analysis and Mapping: The Business System / Value Chain

    Uploaded by

    mecaunidos7771
    123 views40 pages
    The document discusses industry analysis and mapping using the concepts of value chains and strategic groups. It provides examples of how different companies compete based on either low delivered cost by focusing on process or high perceived value by focusing on product. Examples are given from industries like watches, PCs, packaging equipment, chain saws, and automobiles to illustrate strategic groups and how industry maps can change over time.

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    WKH2 Business System Value Chain

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    The document discusses industry analysis and mapping using the concepts of value chains and strategic groups. It provides examples of how different companies compete based on either low delivered cost by focusing on process or high perceived value by focusing on product. Examples are given from industries like watches, PCs, packaging equipment, chain saws, and automobiles to illustrate strategic groups and how industry maps can change over time.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    123 views40 pages

    Industry Analysis and Mapping: The Business System / Value Chain

    Uploaded by

    mecaunidos7771
    The document discusses industry analysis and mapping using the concepts of value chains and strategic groups. It provides examples of how different companies compete based on either low delivered cost by focusing on process or high perceived value by focusing on product. Examples are given from industries like watches, PCs, packaging equipment, chain saws, and automobiles to illustrate strategic groups and how industry maps can change over time.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 40

    Industry Analysis and Mapping

    The Business System / Value Chain


    William K. Holstein
    Before we begin
    the end of the story

    of the T and the Q
    A Simple Business System (Value Chain)
    Design
    and
    R & D
    Manufacturing Marketing
    Distribution
    and
    Service
    Where can we attack?
    Where can we achieve competitive advantage?
    Where are existing rivals vulnerable?
    Two Ways to Compete
    Low Delivered Cost
    Focus on PROCESS
    High Perceived Value
    Focus on PRODUCT
    DELIVERED Cost
    How did the Japanese capture more than half of the
    watch industry from the Swiss, despite higher
    manufacturing costs ???

    Design
    and
    R & D
    Manufacturing Marketing
    Distribution
    and
    Service
    They couldnt do
    much here

    So they attacked
    here
    They couldnt do
    much here

    Why PERCEIVED Value?
    Why is one BMW 7-Series
    worth more than ten Daewoo Ticos?
    Design
    and
    R & D
    Manufacturing Marketing
    Distribution
    and
    Service
    Its all
    here
    Its all
    here
    And
    here
    PC Industry Example
    Customers
    R & D
    Design
    Compo-
    nents &
    Software
    Assembly Marketing Distribu-
    tion
    Service
    Only these activities are inside the typical Personal Computer company
    Disk Drives
    Monitor
    Circuit Boards
    CPU
    Operating System
    Applications S/ W
    SUPPLIERS DISTRIBUTORS
    and RETAIL
    CHANNELS
    Sub-
    Contractors
    Advertising
    Agencies
    Service
    Organizations
    Technology and what we do
    Isn't Enough . . .
    Design
    and
    R & D
    Manufac-
    turing
    Marketing
    Distribution
    and
    Service
    Consumers
    and
    Customers
    You have to manage the
    WHOLE BUSINESS SYSTEM
    What Business are we in ?
    Packaging Equipment Example
    Cardboard
    Forming
    Equipment
    Printing
    Equipment
    Direct
    Agents
    Fast Service
    and Parts
    Delivery
    Consumer
    Goods
    Manufacturers
    Two
    Diversifications
    1981 1985
    Photo Word
    Typesetting Processing
    Equipment Equipment
    Cardboard
    Forming
    Equipment
    Printing
    Equipment
    Direct
    Agents
    Fast Service
    and Parts
    Delivery
    Consumer
    Goods
    Manufacturers
    Photo
    Typesetting
    Equipment
    Word
    Processing
    Equipment
    Printing
    Equipment
    Dealers
    Office
    Equipment
    Dealers
    Assistance
    with
    Financing
    Training
    Materials
    Printers
    Newspapers
    Offices
    What Business are we in ?
    Different Different Different Different
    Competitors Distribution Service Customers
    Works Case
    Assem-
    bly/ and
    Market-
    ing
    Whole-
    sale and
    Distribu-
    tion
    Retail
    A Business System (Value Chain)
    Swiss Watch Industry - 1984
    Final
    Consumers
    25 50 8 83 134 300 SFr
    Economics of the System
    Swiss Watch Industry - 1984
    Works Case
    Assem-
    bly/ and
    Market-
    ing
    Whole-
    sale and
    Distribu-
    tion
    Retail
    25 50 8 83 134 300 SFr
    How did Seiko gain competitive advantage
    in the 1980s?
    200 SFr
    A Business System (Value Chain)
    Swiss Watch Industry - 1984
    Works Case
    Assem-
    bly/ and
    Market-
    ing
    Whole-
    sale and
    Distribu-
    tion
    Retail
    Professional
    Group:
    Stihl
    Jonsereds
    Husqvarna
    Solo
    Skil
    Branded Mass Mkt:
    Homelite
    McCulloch
    Private Label:
    Beaird-Poulan
    Roper
    Quality/
    Brand
    Image
    High
    Low
    dealers
    Mass Merchandisers Private Label
    Retail Distribution
    10-year old study by Michael Porter
    Strategic Groups:
    US Chain Saw Industry
    U.S. Chain Saw Industry
    ROI
    Market
    Share
    Focus Stuck in
    the Middle
    Cost
    Leadership
    Husqvarna
    solo
    Skil
    Roper
    Beaird-Poulan
    0
    Porters Curve
    Mercedes
    Jaguar
    BMW
    Hyundai
    Yugo
    GM
    Ford
    Chrysler
    Nissan
    Toyota
    Price/Quality
    High
    Low
    Few Many Market Segments
    Served
    Auto Industry Strategic Groups
    20-year old study by Michael Porter
    Volvo
    Saab
    More Recent Auto Industry Map
    Mercedes
    Jaguar
    BMW
    GM
    Ford
    Chrysler
    Nissan/Renault
    Toyota
    Price/Quality
    High
    Low
    Few Many Market Segments
    Served
    Hyundai/Kia
    Daewoo
    Volvo
    Saab
    Peugeot/Citroen
    Mazda
    Mitsubishi
    Fiat
    Honda
    The Future Auto Industry Map?
    GM (+ Daewoo, Saab, Hummer, Isuzu, Suzuki)
    Ford (+ Mazda, Volvo, Jaguar, Land Rover)
    Toyota (+ Lexus, Scion)
    Daimler Chrysler (+ Smart, Mitsubishi?, Trucks)
    Volkswagen (+ Audi, Seat, Skoda, Phaeton, Bentley)
    Honda (+ Accura)
    Nissan/Renault


    Price/Quality
    High
    Low
    Few Many
    Market Segments Served
    Hyundai
    +Kia
    PSA
    BMW
    + Rolls,
    Mini
    Fiat
    +Ferrari,
    Porsche
    Mitsu-
    bishi
    Renault
    PSA
    Nissan
    Honda
    VW
    Toyota
    Daim-
    Chrysler
    Ford
    World Top Ten 2003 Sales
    GM
    Hyundai
    8.6 m units
    $185.5 b Sales
    2.4 m units
    $42.2 b Sales
    Area of circle = Relative Size
    Only Toyota and Honda
    in purely Japanese hands
    Renault
    PSA
    Nissan
    Honda
    VW
    Toyota
    Daim-
    Chrysler
    Ford
    World Top Ten with 2004 Profits
    GM
    Hyundai
    $2.9 b
    8.6 m units
    $4.5 b
    $2.1 b
    $10.5 b
    $6.9 b
    $3.5 b
    $1.7 b 1.78 m units
    $3.5 b
    $1.8 b
    $4.8 b
    BMW $2.2 b 1.3 m units
    Porsche $0.7 b .088 m units

    The Big Squeeze
    You have to be
    BIG and you have
    to offer VARIETY
    You Have to be BIG
    What if you arent BIG?
    A Different Industry Map
    High Delivered Cost Low
    High



    Perceived
    Value




    Low
    Good Value
    Good Price
    A Different Industry Map
    High Delivered Cost Low
    European = Stylish, Sturdy
    Japanese = High Quality, High Resale Value,
    Good Service
    Function of Design, Prestige, Distribution
    Scale Economies, Platform Savings
    Design and Speed Advantages
    Distribution, Partnering, Supply Chain,
    Capital + Investment Incentive Advantages
    Worth More
    Costs Less
    High



    Perceived
    Value




    Low
    A Different Industry Map
    High



    Perceived
    Value




    Low
    Low Delivered Cost
    Competitors
    High Perceived Value
    Competitors
    Stuck in the Middle
    Out-Performing
    Competitors
    High Delivered Cost Low
    Mercedes, BMW
    An Auto Industry Map
    High



    Perceived
    Value




    Low
    Volkswagen
    Fiat
    Jaguar, Audi
    Saab, Volvo
    Peugeot/
    Citroen Renault
    Hyundai,
    Kia
    Toyota
    Honda
    High Delivered Cost Low
    Nissan
    Result of Toyota Outperforming
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    1
    9
    9
    4
    1
    9
    9
    5
    1
    9
    9
    6
    1
    9
    9
    7
    1
    9
    9
    8
    1
    9
    9
    9
    2
    0
    0
    0
    2
    0
    0
    1
    2
    0
    0
    1
    2
    0
    0
    3
    2
    0
    0
    4
    2
    0
    0
    5
    GM
    Ford
    Toyota
    Source: Global Insight
    Fortune, The Economist
    Blueovalnews.com
    Millions of Units
    Worldwide sales of cars and trucks
    Value Creation/Destruction Map
    Source of Advantages
    Not a good
    place to be!
    Strategic Moves
    High



    Perceived
    Value




    Low
    Mercedes Benz
    Volkswagen
    Fiat
    Jaguar
    Peugeot/
    Citroen
    Renault
    Toyota
    Honda
    High Delivered Cost Low
    Nissan
    Hyundai
    Kia
    Strategic Moves- Why not ?
    High



    Perceived
    Value




    Low
    Mercedes Benz
    Volkswagen
    Fiat
    Jaguar
    Peugeot/
    Citroen
    Renault
    Toyota
    Honda
    High Delivered Cost Low
    Nissan
    Hyundai
    Kia
    Pure Strategies
    High



    Perceived
    Value




    Low
    Mercedes Benz
    Fiat
    Jaguar
    Toyota
    Honda
    High Delivered Cost Low
    Hyundai
    Kia
    Under Threat
    OK?
    L-shaped Strategic Moves
    High



    Perceived
    Value




    Low
    Volkswagen
    Peugeot
    High Delivered Cost Low
    Outperforming
    Competitors
    L-shaped Strategic Moves
    High



    Perceived
    Value




    Low
    High Delivered Cost Low
    HP Intel Servers
    Dell Intel Servers
    While Dell once undercut
    competitors by upward of 50%,
    today the price differential is
    about 3%. Its pretty much an
    even playing field now.
    Baseline Magazine, September 2004
    L-shaped Strategic Moves
    at Bucks County School System
    High



    Perceived
    Value




    Low
    High Delivered Cost Low
    IBM Intel Servers
    Compaq Intel Servers
    We felt good about the experience
    we had with IBM engineers they
    were really trying to get to know
    our environment.
    Baseline Magazine, September 2004
    IBM gets the nod of
    approval for Intel- based
    servers even if its
    systems tend to be pricier
    than rivals. IBM
    provided better integra-
    tion and seemed more
    technically astute.
    Another Strategy Definition
    Developing and deploying
    Strategic Assets and
    Capabilities that fit the needs
    of a definable market and
    environment at a given point
    in time.

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