4.1.5 Example (1)

Lakshmi is a software development manager for a software house, that uses, conjoinly with her team, Value Chain Analysis to find out how they can deliver excellent service to their clients.

During the Activity Analysis, they identified the following activities that create value for clients:

  • Order taking,
  • Enhancement specification,
  • Scheduling; Software development,
  • Programmer testing,
  • Secondary testing,
  • Delivery and Support.

Other non-client-facing activities were also identified as being important as Recruitment and Training. Lakshmi registers the first three client-facing activities in a vertical value chain -
Step 1: "Activity Analysis" box in Figure 3 below:

Click on the thumb nail to enlarge figure 3: Value Chain Analysis Example

Next, focusing on the Order Taking process, the inner factors were identified, those that will give the greatest value to customers - the Value Factors, such as:

  1. Giving a quick answer to incoming phone calls,
  2. Having a good knowledge of the customer´s business, situation and system, so that they do not waste the customer´s time with unnecessay explanation,
  3. Asking all the right questions, and getting a full and accurate understanding of the customer´s needs and
  4. Explaning the development process to the customer and managing his/her expectations as to the likely timetable for delivery.

These factors are further considered in the „Value Factors “column (Fig 3) where they then look at what they need to do to deliver the maximum value to the customer. These aspects are shown in the „Changes Needed “column. Subsequently, a similar analysis is made for all the other processes. Once the brainstorming is complete, Lakshmi and her team may be able to identify quick wins, reject low yield or high cost options, and agree on their priorities for implementation.


EXERCISE: Apply the value chain analysis to your firm and find out if it works for you!


1. Following a brainstorming session with your team, complete the following table:


Click on the thumb nail to enlarge the table. You can also find it under the right column "Related Resources" for download.

2. After critically evaluating the ideas which emerged, establish a plan of action. Firstly pick out some of the easy, quick and cheaper ideas. After that, consider the more difficult changes. Some may be unrealistic. Other will bring only minor improvements, but at great costs. Drop these.

3. Finally prioritize the remaining tasks and plan to undertake them in a step-by-step way that enhances your firm’s activities

By using Value Chain Analysis and by following it through to action, you can reach excellence in what actually matters to your customers!


1 Value Chain Analysis: Achieving Excellence in the Things that Really Matter, viewed 6 August 2009 (adapted), http://www.mindtools.com/pages/article/newTMC_10.htm