fs value chain

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Financial Services ValueFinancial Services ValueChainChain

MFS IVMFS IV



Value ChainValue Chain - - ConceptConcept

To better understand the activities through which a firmdevelops a competitive advantage and createsshareholder value, it is useful to separate the businesssystem into a series of value-generating activitiesreferred to as the value chain .

In his 1985 book Competitive Advantage , Michael Porter

introduced a generic value chain model that comprises asequence of activities found to be common to a widerange of firms. Porter identified primary and supportactivities as shown in the following diagram:



VALUE CHAIN APPROACHVALUE CHAIN APPROACHSalient featuresSalient features

Inbound logistics include the receiving, warehousing,and inventory control of input materials.Operations are the value-creating activities thattransform the inputs into the final product.Outbound logistics are the activities required to get thefinished product to the customer, including warehousing,order fulfillment, etc.Marketing & Sales are those activities associated withgetting buyers to purchase the product, includingchannel selection, advertising, pricing, etc.Service activities are those that maintain and enhancethe product's value including customer support, repair services, etc.



VALUE CHAIN APPROACHVALUE CHAIN APPROACHSalient featuresSalient features

P rimary Value Chain Activities

InboundLogistics

> Operations > OutboundLogistics > Marketing& Sales > Service



VALUE CHAIN APPROACHVALUE CHAIN APPROACHSalient featuresSalient featuresSupport Services

P rocurement - the function of purchasing the rawmaterials and other inputs used in the value-creatingactivities.Technology Development - includes research anddevelopment, process automation, and other technologydevelopment used to support the value-chain activities.Human Resource Management - the activities

associated with recruiting, development, andcompensation of employees.Firm Infrastructure - includes activities such as finance,legal, quality management, etc



Financial Services Value ChainFinancial Services Value ChainThe value chain model is a useful tool for defining afirm's c ore c ompeten c ies and the activities in whichit can pursue a c ompetitive advantage su ch as :

Cost advantage : by better understanding costsand squeezing them out of the value-addingactivities.

Differentiation : by focusing on those activitiesassociated with core competencies and capabilitiesin order to perform them better than it is being doneby competitors.



B anking Industry Value ChainB anking Industry Value Chain

Primary Activities:

1. Marketing2. Sales3. Product/ Service

4. Transaction



B anking Industry Value ChainB anking Industry Value Chain

Support Activities

1. Technology2. Human Resources3. Infrastructure

4. Risk Management Guidelines



Management is doing thingsManagement is doing thingsright, leadership is doing rightright, leadership is doing right

thingsthings

Peter DruckerPeter Drucker

fs value chain

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