Value analysis and value shop model

Management of business is very important to sustain and survive. Further it becomes very important in stress scenarios when other parameters are negative. Then we need to take proactive action. So in this regard two very common management models can be discussed.

Value chain analysis: It involves dividing the entire process into small parts and identifying the value creating and non value creating activities.

Next step is to eliminate the non value activities from the entire process which will increase the efficiency as well as improve cost structure. One important factor to be considered that quality should not be compromised.

The main focus is on the value it creates. It provides a competitive advantage which is the difference between the value it creates and the cost of delivering the value.

It involves two activities which are as follows:

  1. Primary activities
    • Inbound logistics
    • Operation
    • Outbound logistics
    • Marketing and sales
    • After sales service
  2. Secondary activities
    • Infrastructure
    • Human resources development
    • Firm infrastructure
    • Technology

Value shop model: This concept mainly helps service sector companies. It focuses on problem solving rather than value creation.

It involves following steps:

  • Identification of problems
  • Providing solutions
  • Choosing from alternatives
  • Control/ Evaluation.

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