Value Chain - Use It To Grow Your Business -
In todays' super competitive business environment every business that wants to be successful must learn to be flexible, without deviating from core values.
You must have a way of benchmarking what is working vs what is not and you must be able to outsource effectively to increase efficiency and profitability.
This is important to understand, if other businesses are making money while you are not, then understanding the -value chain- and how it works could help you identify where you need to make changes to improve your business and your results.
The Value Chain is similar to an assembly line where the raw material is taken into the factory where it passes through several different departments and in each department the raw material is enhanced until at the last department the finished product is completed.
By creating a list of activities that your business engages in on a regular basis in order to generate sales or income you can then begin the process of doing a -value chain- analysis.
This will allow you to begin evaluating each of those activities to see where improvements can be made and cost or expenses can be reduced.
This also allows a business to increase its potential for developing and maintaining a sustainable competitive advantage.
Once you have created a -value chain- for your business you will then be able to see the role that it can play in helping you to improve your businesses performance, develop a competitive advantage and grow your sales.
One of the main benefits is that it allows you to systematically work on maximizing customer value while also reducing business cost to attract more customers and earn more profits.
A detailed -value chain- analysis can help to facilitate effective outsourcing decisions as well.
Basically the -value chain- is a sequence of activities that a business engages in to create value for its customers.
The actual process of creating and using a -value chain- analysis can be done in three basic steps they are :
Step 1.) Breakdown the key activities of your business into separate inputs, steps, processes or components.
Step 2.) The next step is to look for ways of increasing the amount of value added for the end user or potential customer at a lower cost.
This is required to realistically expect to achieve sta-in-ability in a competitive marketplace.
Step 3.) Find ways to perform the entire operation faster. This will allow you to develop a competitive advantage.
Here Is A Basic Example:
For this example we will be looking at a -value chain- for a startup online marketing business model and we will be looking at the following 4 items - Inputs, Business Processes, Products or Service and Customer Value.
*Inputs - For most marketers this would start with life, your personal or life experiences, market research, a website or blog and the internet.
In a business like online marketing these things are usually available to just about anyone.
*Business Process - This is the key to success for any business, online or offline and there are a lot of important factors but these are the key factors to look at :
*Quality - How well can you out rank your competitors with high quality content . This could be in the form of articles, videos or some other form of content.
*Efficiency - How fast can you convert your inputs(research or data) into content? And are you updating your content on a regular basis ?
*Marketing - How are you getting traffic to your site and keeping the ones that you get, coming back? This is where list building is so important.
*Customer Service/Support - Are you collecting information about your customers needs and how well you are addressing them ?
*Products or Services - For most marketers your contribution to the product is your content and also the overall visitor experience.
That is why interactive features such as polls, surveys, comments and discussions that happen in comments are so important.
They provide useful engagement and they add to all users perception of value.
*Customer Value - The determinate of your sites' value is the amount of time that visitors spend at your site, multiplied by your number of visitors that you get.
Finally, the way that you choose to monetize your traffic comes into play and it is the last part in the marketing and sales component of the business process of your -value chain.
By systematically listing and looking at each component of your business to create a -value chain- for your business, you will have a very effective way of focusing your attention and efforts on each individual part of your business operations to see what is working and what can be made to work better.