When to use value chain analysis?

BCG
New answer on Feb 28, 2020
4 Answers
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Jimmy asked on Feb 17, 2020

In what kind of cases should i use value chain analysis?

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Luca
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replied on Feb 28, 2020
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Alex,

You have to use it everytime that you need to investigate operations mostly in order to:

  • Decrease costs
  • Increase production capability

Best,
Luca

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Vlad
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replied on Feb 17, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

3 types of cases:

  • Cases in supply chain and logistics
  • Cases on synergies (You have synergies in revenues and costs. You investigate cost synergies with the value chain)
  • Cases with operational bottlenecks (e.g. Reduce the queue at the ski resort. Reduce the write-offs in retail)

Best

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Clara
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replied on Feb 17, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

1st of all, have a look at this post from some days ago, it´ll help you with the distinction vs. FC & VC frameworks > 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#first-answer.

This said, both breakdowns (FC & VC vs. Value Chain) can be perfectly fine if they are well argumented.

I would say that in most cases, Fixed vs. Variable is an easier way to tackle down these kind of problems. However, keep your eyes open for hints that point you towards a value-chain approach (e.g., issues in the process, total costs of revenues going down in time, etc.)

Hope it helps.

Cheers,

Clara

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Francesco
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replied on Feb 18, 2020
#1 Coach for Sessions (4.000+) | 1.400+ 5-Star Reviews | Proven Success (➡ InterviewOffers.com) | Ex BCG | 9Y+ Coaching

Hi Alex,

you normally use a value chain analysis in the following situations:

  • Any case related to costs – as a way to brainstorm cost types
  • Operations cases – as a way to understand where the problem is in the value chain

Best,
Francesco

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Luca gave the best answer

Luca

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BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached
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