Change Implementation Techniques for Creating a Sense of Urgency

Technique 2.26 Porter's Value Chain

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Introduction

. Based on the concept of the organisation being a series of activities which either add or subtract value to the customer and/or itself

. There are 2 ways of thinking of a product's/service's value chain

i. conceptualised in terms of its processes, ie value-added steps required to create or deliver product/service. For example, the processes of design, component manufacture, assembly, marketing, sales and distribution of processes in a value chain.

ii. in terms of components that go into a product. For example, the engine block, chassis, braking system, electronic subsystems, etc that go into a car as a component of the car's value chain.

Process

. Identify the different activities on the value chain that are performed by the organisation and allocate them as primary or support activities. Then determine the value to both the customer and the organisation. The value to the customer is defined as the difference between the benefits received and the cost of access, while the value to the organisation is the difference between the price received for the good/services and the cost of production. Use the diagram below to help identify and allocate activities, especially most and least profitable

. Can use the value chain to compare current and future situations, ie identify the gaps

organisational development change management

organisational development change management

(sources: Michael Porter, 1997: Michael Porter et al, 2006; Clayton Christensen et al, 2003)


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