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How can value chain analysis tools help you assess your competitors?

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Value chain analysis is a powerful tool to understand how your business creates and delivers value to your customers. But it can also help you assess your competitors and identify their strengths and weaknesses. By comparing your value chain with theirs, you can discover opportunities to improve your competitive advantage and differentiate your products or services. In this article, you will learn how to use value chain analysis tools to assess your competitors and what to look for in each stage of the value chain.

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Shweta Tiwari

Management Trainee (HR) Svatantra Housing Micro Finance Corporation | MBA 2022-2024 at Ahmedabad University | Project…

1 What is value chain analysis?

Value chain analysis is a framework that divides a business into a series of activities that add value to the final product or service. These activities can be classified into two categories: primary and support. Primary activities are directly involved in creating and delivering the product or service, such as inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are indirectly involved in creating and delivering the product or service, such as procurement, human resource management, technology development, and infrastructure. By analyzing each activity, you can identify how much value it adds to the customer and how much cost it incurs to the business.

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Fola Olatunde. PMP?, MBA

Operations Leader |Project Management | Strategy, and Customer Experience |
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Value chain analysis is a strategic management tool that helps businesses dissect the various activities involved in creating, producing, and delivering a product or service. It involves breaking down these activities into primary and support activities, identifying areas of competitive advantage, and understanding how each activity contributes to the overall value offered by the business.

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Paulo Andrés Idárraga Rodríguez

| CEO | CFO | COO | Gerente General | Optimización de Procesos | Estrategia Empresarial | Gestión de Proyectos | Dirección Financiera | Desarrollo de Negocios | Gestión de RRHH | Operaciones | ERP |M.B.A.|M.P.M.|M.SC.M.|
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Es una herramienta estratégica que permite a las empresas comprender cómo crean y entregan valor a sus clientes. El análisis de la cadena de valor se puede realizar en tres pasos principales: 1. Identificar las actividades dentro de la cadena de valor. Las actividades dentro de la cadena de valor se pueden dividir en dos categorías principales: actividades primarias y actividades de apoyo. 2. Analizar el valor y costes de las actividades identificadas. Para cada actividad identificada, es importante analizar su valor y costes. El valor de una actividad es la contribución que hace a la satisfacción del cliente. El coste de una actividad es el gasto que se requiere para realizarla. 3. Identificar oportunidades de ventaja competitiva.

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2 How to use value chain analysis tools to assess your competitors?

In order to use value chain analysis tools to assess your competitors, you must first identify your main competitors and their products or services. Then, collect information about their value chain activities, such as suppliers, processes, distribution channels, pricing strategies, customer segments, and after-sales service. Afterward, use a value chain analysis template or tool to map out their value chain and compare it with yours. Subsequently, evaluate their value chain performance in terms of cost efficiency, quality, innovation, customer satisfaction, and profitability. Finally, identify their sources of competitive advantage and disadvantage such as core competencies, unique resources, differentiation factors, and vulnerabilities.

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Fola Olatunde. PMP?, MBA

Operations Leader |Project Management | Strategy, and Customer Experience |
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In my experience, when applying value chain analysis to assess competitors, the process involves examining their activities at each stage of the value chain to identify strengths, weaknesses, opportunities, and threats. This allows a company to benchmark its own performance and make informed strategic decisions.

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3 What to look for in the inbound logistics stage?

The inbound logistics stage involves activities related to receiving, storing, and distributing the inputs for the production process. To assess your competitors in this stage, you should look into their suppliers and their relationships with them, such as bargaining power, quality standards, delivery times, and prices. Additionally, you should examine their inventory management and warehousing systems, such as stock levels, turnover rates, storage costs, and location. Furthermore, you should consider their transportation and handling methods, such as modes, routes, frequency, and costs.

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Fola Olatunde. PMP?, MBA

Operations Leader |Project Management | Strategy, and Customer Experience |
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In my experience, the below have been helpful Supplier relationships: Assess the strength and reliability of your competitor's relationships with suppliers. A well-managed inbound logistics stage ensures a smooth flow of materials into the production process. Cost efficiency: Evaluate how efficiently your competitor manages the procurement and handling of raw materials. Look for opportunities for cost reduction and optimization.

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4 What to look for in the operations stage?

The operations stage involves activities related to transforming inputs into the final product or service, such as manufacturing, assembly, testing, and packaging. To assess your competitors in this stage, you should consider their production processes and technologies in terms of capacity, efficiency, flexibility, and innovation. Additionally, you should evaluate their quality management and control systems with regard to standards, procedures, inspections, and feedback. Furthermore, you should assess their environmental and social impacts in terms of waste management, energy consumption, emissions, and compliance.

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Fola Olatunde. PMP?, MBA

Operations Leader |Project Management | Strategy, and Customer Experience |
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Production efficiency: Analyze how effectively your competitor transforms raw materials into finished products. Look for innovative processes, technology adoption, and overall operational excellence. Quality control: Evaluate the measures your competitor takes to ensure the quality of their products during the production process.

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5 What to look for in the outbound logistics stage?

The outbound logistics stage involves activities related to delivering the final product or service to the customer, such as order processing, shipping, and distribution. To assess your competitors in this stage, you should analyze their distribution channels and partners, such as retailers, wholesalers, agents, and intermediaries; delivery methods and times, such as modes, routes, frequency, and reliability; and customer service and support systems, such as order tracking, returns, warranties, and complaints. Doing so can help you gain insight into their operations and better understand their competitive position.

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6 What to look for in the marketing and sales stage?

The marketing and sales stage involves activities related to promoting and selling the product or service to the customer, such as advertising, branding, pricing, and sales. To assess your competitors in this stage, you should observe their marketing mix and strategies, such as product features, benefits, and differentiation; pricing methods, discounts, and margins; promotion channels, messages, and campaigns; and place of availability, accessibility, and convenience. Additionally, you should look into their market segmentation and targeting – including customer profiles, needs, preferences, and behaviors – as well as their market position and share – such as reputation, awareness, loyalty, and growth.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Shweta Tiwari

Management Trainee (HR) Svatantra Housing Micro Finance Corporation | MBA 2022-2024 at Ahmedabad University | Project Intern at Novotel Ahmedabad | Summer internship at Arvind Ltd.
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Value chain analysis helps assess competitors by examining each step of the production and delivery process. It identifies areas of strength and weakness, allowing a comparative analysis against competitors to pinpoint where competitive advantages or disadvantages lie within the value chain. This enables businesses to strategize and focus on areas that offer opportunities for improvement or differentiation, potentially outperforming competitors.

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Marco Reber

Entrepreneur | Digital Enthusiast | Strategischer Denker | Lean Start Up Experte | AI Experte | Experte in Leadership, Change und Innovation | Growth Minded
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Bevor ich anfangen kann, Wettbewerber zu analysieren muss ich diese kennen - hier beginnt es h?ufig schon mit einem "blinden" Fleck. Insbesondere die Kenntnisse der gr?ssten Konkurrenten einerseits aber auch der potenziellen Konkurrenten in Form von Start Up Firmen - übrigens auch vermeintlich branchenfremde. Eine sorgf?ltige Trendanalyse des Marktes (dazu geh?rt für mich der Wettbewerb) bildet dafür die Basis. Benchmarks sind zwar gut - jedoch aufwendig und sind wir ehrlich: wollen wir gleich sein wie die anderen oder ausserordentlich?

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How can value chain analysis tools help you assess your competitors?

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1 What is value chain analysis?

2 How to use value chain analysis tools to assess your competitors?

3 What to look for in the inbound logistics stage?

4 What to look for in the operations stage?

5 What to look for in the outbound logistics stage?

6 What to look for in the marketing and sales stage?

7 Here’s what else to consider

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How can value chain analysis tools help you assess your competitors?

1

2

3

4

5

6

7

1 What is value chain analysis?

2 How to use value chain analysis tools to assess your competitors?

3 What to look for in the inbound logistics stage?

4 What to look for in the operations stage?

5 What to look for in the outbound logistics stage?

6 What to look for in the marketing and sales stage?

7 Here’s what else to consider

Business Operations

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