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FUNCTIONAL Value analysis The purpose of the functional value analysis is twofold: to identify and develop a firm's value chain capabilities in order to open up new market opportunities; and to optimally calibrate a firm’s functional activities to better fulfill the needs and objectives of its customers. The mission of a firm is to produce and distribute valuable products and services to its respective customer segments. Its vision addresses the effectiveness and efficiency with which the firm executes that mission. A competitive firm maximizes the value creating abilities of the functions, activities and processes within its value chains for the lowest total cost. VXTConsulting's functional value analysis encompasses the entire value chain of our clients. We audit and review our clients' functions, activities and processes for effectiveness and efficiency, including supplier, partner and channel relationships. The activities are grouped in the following main functional areas: Ø Development Ø Procurement Ø Operations Ø Sales and marketing Ø Delivering, provisioning and servicing Ø Logistics Ø Human resources Ø Infrastructure and management We examine the functional areas in terms of customer value objectives. We map the processes by which the value is created and delivered, and quantify the costs. This provides us with a basis for benchmarking our clients' business models and operations in terms of value objectives, performance achievement, and cost efficiency, and determine: 1. Strengths and weaknesses of business model and value creating abilities. 2. Performance level of service outputs in terms of effectiveness and cost. 3. Best practices in value creation, process effectiveness and cost efficiency. 4. Relative strength of client's core competencies and non-core functions. 5. Quick hit measures for cost cutting, and productivity and efficiency gain. We ensure that the end to end value chain processes are streamlined and optimized. To that effect we develop tools and recommend solutions to focus value chain resources on managing customer value. Based on the results of the customer value analysis and segmentation, we proceed to: 1. Perform a functional value gap analysis and identify strategic options. 2. Enhance our clients’ value creating abilities through process and organizational development and alignment. 3. Recommend functional alignment of value activities to optimize the value creating processes; maximizing effectiveness and minimizing overall cost. 4. Identify opportunities for leveraging our client's core competencies and achieve economies of scale. 5. Recommend alternatives to improve performance and cost efficiency of non-core functions. 6. Assess new market opportunities emerging from leveraging strategic partner and alliance relationship, and value chain assets and resources. 7. Determine our clients' competitive positioning options based on their cost structures and value chain capabilities for each of their targeted customer segments(1).
(1) This stage is most effective when coordinated with other aspects of the competitive strategy development and value chain management processes, and assumes a thorough knowledge of market needs and segmentation. Hence, we strongly recommend that this analysis be supported by the other steps of the value chain management process, to optimally deploy the value chain resources in support of high growth, high margin customer segments. |
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