There is a further analysis to add to Porter coming from John Shank and Vijay Govindarajan.
I have prepared a detailed review of Porter and Shank & Govindarajans' analyses and they can be yours free of charge. Just write to me at duncan@duncanwil.co.uk and put value chain in the subject and I will send you a PDF file that begins as follows:
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Value Chain Analysis
Duncan Williamson
This article is concerned with value chain analysis and you should find it useful for you as you consider ways of enhancing the services that you provide to your clients. An understanding both of value added and analysis and value chain analysis will put you ahead of many accountants for whom these skills are elusive!
Having defined the term value chain, we will take a look at a series of examples that will illustrate the need for such analysis. Value chain analysis is best used when analysing a company’s competitive advantage, or lack of it. Michael E Porter suggests using the value chain to separate the company's activities in the value chain into detailed discrete activities. When broken down to a sufficient level of detail, the relative performance of a company can be determined. (Have et al)
Shank and Govindarajan provide fascinating insights into value chain analysis that take Porter’s seminal ideas a stage further. This article explores some aspects of value chain analysis using data taken from the annual reports and accounts of British Airways and easyJet.
The article starts, however, by distinguishing value chain analysis from value added analysis.
The following are the section headings I have used in the rest of the paper:
- Value Added v Value Chain Analysis
- Identifying Value Activities
- The Value Chain
- Value Chain Framework
- Strategic Implications
- Supplier Linkages
- Beneficial Linkages
- How Value Chain Analysis Works
- Value Chain Case Study: airlines
- easyJet
- British Airways
- Conclusions
- References
Duncan Williamson
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