National Community Reinvestment Coalition 2012 National Community Reinvestment Coalition 2012 High-Revenue Positions in Value Chains High-Revenue Positions in Value Chains Leonard Greenhalgh, PhD Leonard Greenhalgh, PhD Professor, Professor, and and Faculty Director, MWBE Programs, Faculty Director, MWBE Programs, Tuck School of Business at Dartmouth Tuck School of Business at Dartmouth
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National Community Reinvestment Coalition 2012National Community Reinvestment Coalition 2012
High-Revenue Positions in Value ChainsHigh-Revenue Positions in Value ChainsLeonard Greenhalgh, PhDLeonard Greenhalgh, PhD
Professor, Professor, andand Faculty Director, MWBE Programs, Faculty Director, MWBE Programs, Tuck School of Business at DartmouthTuck School of Business at Dartmouth
What business has What business has high revenue potential?high revenue potential?
• Growing industryGrowing industry• Central value chain positionCentral value chain position• Ability to deliver valueAbility to deliver value• PortfolioPortfolio
Are you in a growth industry?Are you in a growth industry?
• AutomotiveAutomotive • HousingHousing
Are you in a growth industry?Are you in a growth industry?
• AutomotiveAutomotive• Geriatric careGeriatric care
• HousingHousing• IT staffingIT staffing
Are you in a growth industry?Are you in a growth industry?
• AutomotiveAutomotive• IT staffingIT staffing• GiveawaysGiveaways
• HousingHousing• Geriatric careGeriatric care• Green solutionsGreen solutions
Even if you’re in a growth industry: Even if you’re in a growth industry: Are you in a good part of the value chain?Are you in a good part of the value chain?
• What is your place in the value chain?What is your place in the value chain?
• What actual value is being added?What actual value is being added?
• Are you getting your share of total Are you getting your share of total value-chain revenue? value-chain revenue?
• Can someone take over your position?Can someone take over your position?
How do you fit into the value chainHow do you fit into the value chain??
End-UseEnd-Use
CustomerCustomer After Market
DistributionAssemblyComponentsRawMaterials
Who is taking the profits in the value chain?Who is taking the profits in the value chain?
High
Low
Level of
Profit
End-UseEnd-Use
CustomerCustomer After Market
DistributionAssemblyComponentsRaw
Materials
Who is taking the profits in the value chain?Who is taking the profits in the value chain?
High
Low
Level of
Profit
End-UseEnd-Use
CustomerCustomer After Market
DistributionAssemblyComponentsRaw
Materials
An entrepreneur’s mission statement An entrepreneur’s mission statement that limits his value-chain positionthat limits his value-chain position
““We We traintrain sewage-treatment facility employees sewage-treatment facility employees to operate the local water treatment plants”to operate the local water treatment plants”
NeedsAssessment
DesignTreatmentFacility
Build TreatmentPlant
TrainTrainWorkersWorkers
Operate Facility
Maintain And UpgradeFacility
NeedsAssessment
DesignTreatmentFacility
Build TreatmentPlant
TrainTrainWorkersWorkers
Operate Operate FacilityFacility
Maintain Maintain And UpgradeAnd UpgradeFacilityFacility
Another Entrepreneur’sAnother Entrepreneur’s Limiting Mission Statement Limiting Mission Statement
““We provide high-quality We provide high-quality janitorial services”janitorial services”
• Do it Do it differentlydifferently– Segment, target, and position; or innovateSegment, target, and position; or innovate– Differentiation strategyDifferentiation strategy
• Gain Gain customer loyaltycustomer loyalty– Repeat vs. conquest purchasersRepeat vs. conquest purchasers– Customer relationship management strategyCustomer relationship management strategy
Operations strategy falls into four Operations strategy falls into four categoriescategories
Operational Operational excellenceexcellence
QualityQuality
CostCost
DeliveryDelivery
FlexibilityFlexibility
Operations strategy depends on Operations strategy depends on key customer needskey customer needs
Operational Operational excellenceexcellence
Wal-MartWal-Mart
QualityQuality
CostCost
DeliveryDelivery
FlexibilityFlexibility
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
Wal-MartWal-Mart
Quality 33
Cost 11
Delivery 22
Flexibility 44
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
Wal-MartWal-Mart Red CrossRed Cross
Quality 33
Cost 11
Delivery 22
Flexibility 44
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
Wal-MartWal-Mart Red CrossRed Cross
Quality 33 33
Cost 11 44
Delivery 22 22
Flexibility 44 11
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
SchoolSchool
constructionconstruction
QualityQuality
CostCost
DeliveryDelivery
FlexibilityFlexibility
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
SchoolSchool
constructionconstruction
QualityQuality 33CostCost 22
DeliveryDelivery 11
FlexibilityFlexibility 44
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
SchoolSchool
constructionconstruction
Luxury homeLuxury home
constructionconstruction
QualityQuality 3CostCost 2
DeliveryDelivery 1
FlexibilityFlexibility 4
Operations strategy depends on Operations strategy depends on customer needscustomer needs
Operational Operational excellenceexcellence
SchoolSchool
constructionconstruction
Luxury homeLuxury home
constructionconstruction
QualityQuality 3 1
CostCost 2 4
DeliveryDelivery 1 3
FlexibilityFlexibility 4 2
Operations strategy depends on Operations strategy depends on key customer needskey customer needs
Operational Operational excellenceexcellence
EmergencyEmergency
DepartmentDepartment
QualityQuality
CostCost
DeliveryDelivery
FlexibilityFlexibility
Operations strategy depends on Operations strategy depends on key customer needskey customer needs
Operational Operational excellenceexcellence
EmergencyEmergency
DepartmentDepartment
QualityQuality 44
CostCost 33
DeliveryDelivery 22
FlexibilityFlexibility 11
Operations strategy depends on Operations strategy depends on key customer needskey customer needs
Operational Operational excellenceexcellence
EmergencyEmergency
DepartmentDepartment
Methadone Methadone ClinicClinic
QualityQuality 44
CostCost 33
DeliveryDelivery 22
FlexibilityFlexibility 11
Operations strategy depends on Operations strategy depends on key customer needskey customer needs