Who are the key players in your industry value chain?
Kevin Okwako Ochima
Innovation Programs Manager at Jacob's Ladder Africa | Entrepreneur | Engineer
The value chain in a business is pivotal because it delineates the series of activities that transform raw materials into a final product or service delivered to the customer.
"By analyzing each step of the value chain, businesses can identify opportunities to increase efficiency, reduce costs, and enhance the quality of their offerings."
There are two critical questions that you must ask as an entrepreneur who is analyzing the key players in the value chain:
To what extent does your business depend on other players?
Analyze the main risks you face in your value chain such as supply chain disruptions, and regulatory changes; and see what strategies you have in place to mitigate these risks. If you do not have ways to solve such problems without the current value chain players, then you are highly dependent.
Additionally, consider the primary cost components in your value chain (e.g., raw materials, labor, logistics); do you manage and control costs at each stage of the value chain? In case there is supplier power, i.e. you do not control costs, you need to start thinking of other options.
Are peripheral players emerging who could give better value?
You need key performance indicators to measure efficiency and effectiveness in your value chain. When assessing the value chain players, check on delivery times, customer support, and the ease of getting replacements in case of defects. Such considerations are what new players are looking to capitalize on and they may be a better fit for your business.
Future-looking companies are increasingly putting sustainability practices and ethical considerations at the core of their strategies. This is giving rise to new players in different industries and value chains. Find value chain actors who have measures in place to ensure environmental sustainability and ethical practices.
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Providing detailed information on these aspects will enable a comprehensive analysis of your value chain and help in formulating a competitive strategy tailored to your business.
Stay tuned for next week's discussion, where we'll explore the questions essential for understanding your stakeholders.
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