Value Chain/Segment

customer segments segmentation Value Chain
New answer on Mar 21, 2021
5 Answers
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Anonymous A asked on Mar 17, 2021

Hi everyone.

I am having trouble listing out the Value Chain for each Customer, Product and Distribution Channel segments, respectively. May I know if there is a general guideline on this approach? A few examples would be greatly appreciated too. Thank you!

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Ian
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replied on Mar 17, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

i don't understand your question? Value Chain for each Customer, Product, Distribution Channel segments doesn't really make sense...you've thrown a bunch of consulting words together!!

Adapting a bit the Google definition, we have:

"A value chain is a combination of the systems a company or organization uses to make money by selling to customers. That is, a value chain is made up of various subsystems that are used to create products or services. This includes the process from start (production/manufacturing) to finish (Distribution to the customer)"

Do you see why your question doesn't really make much sense?/

Investopedia is a great resource for most business terms!

https://www.investopedia.com/ask/answers/050115/what-are-primary-activities-michael-porters-value-chain.asp

Here are some other useful Value Chain discussions

https://www.preplounge.com/en/consulting-forum/client-is-og-company-looking-to-integrate-across-the-value-chain-8585

https://www.preplounge.com/en/consulting-forum/operation-case-divide-in-value-chain-6115

https://www.preplounge.com/en/consulting-forum/when-should-i-break-down-costs-as-fixed-and-variable-as-opposed-to-over-the-value-chain-5990

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Raj
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replied on Mar 17, 2021
Strategy&| ex-interviewer | 170+ coached over career |95% success @ MBB, S&, RB, LEK, OW, Big4 [SUCCESS STORIES BELOW]

It sounds like what you are asking is how do you systematically map out the various players within an industry which is essentially what a value chain demonstrates.

What you may be struggling with is even being aware of the various intermediaries involved in the value chain.

For some sectors this is more obvious than others, and is a classic case of an unknown unknown, e.g. you may not even know you don't know there are a whole group of intermediaries in the telecoms market who sell airtime to MVNOs (virtual mobile networks).

I would recommend starting top-down and getting the basics right by thinking about the fundamental steps a product must take to reach a consumer.

Let's take the example of the Electric Vehicle charging sector.

  1. End-user - a user with a car that needs a charger whilst driving down the highway
  2. Charging station owner/operator - there needs to be a charging station operator for the car to use. The owner may even be distinct
  3. Charger owner - whilst Tesla may build the charging infrastructure, own and operate the stations, for non-Tesla chargers, there may be an intermediary operator who actually owns the charging points and leases them to the station owner. The owner would assemble the various parts of a charger to create the full stack.

Two Inputs into the above

  1. Charger manufacturer - BMW are probably not building their own plugs but buying them from a supplier. The inputs to the charger manufacturer will be:
    1. Electronics supplier
    2. Raw materials supplier
    3. Assembly factory (outsourced)
  2. Utility company / battery manufacturer - The station owner would need to connect the charger to the grid which is where the utility would come in. Similarly they have an on-site battery to store excess energy.
    1. Raw materials supplier
    2. Assembly factory
    3. Energy production company

You can see by thinking through who gets what from where, you can figure out what the value chain may look like in a top down way.

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Adi
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replied on Mar 17, 2021
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Ian is spot on!

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Gaurav
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replied on Mar 21, 2021
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

Hello!

Ian's comment is highly valuable! If you don't understand the difference between terms themselves - check on Investopedia, the resource is highly trustworthy and very clear. If this question is related to some case - then we need the details.

Write me, if you have any questions about cases!

GB

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Clara
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replied on Mar 19, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

This is very case-specific, can you tell us the case you are working on?

Cheers,

Clara

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Ian gave the best answer

Ian

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