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Here I tried to mash up “Value chart” and “porter’s five force model” and blend it to reflect how

to create Organizational value to increase profit in global market.

This analysis is the further extension to my previous documents where I discussed “Four Square

Analysis” which explained how we should evaluate our products, services and evaluating our

Organization through SWOT analysis and SCDQ model (BCG model). The other document “decoding the

triangles” where I tried to establish and explain different Organizational relationships.

The simple principle for a business to be sustainable and be market leader is- Increase value,

reduce cost, first meet need then exceed expectation and develop effective future leaders.

Value:

Creating and sustaining Organization value- Organizations values are like human character, it is

more or less reflective through the action, through the services delivered to customers, the products

you sale to customers. Depending on Organizational value, you will be more recognizable, you will be

followed (market and customers will make you leader), increase customers loyalty base, it will help

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Fixed

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Marketing,

Sales and

Relationship

Support

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Substitute

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Customer

Products and

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Brand Creation and Sustainability Cost

Unsalable Products/Service Cost

Suppliers/Vendors Cost

Supply

Demand

Cost

Profit

Margin

Reduce Cost to increase profit

Value and Cost ANALYSIS

By- Sundeep Mohanty.

Market

Market

Increase value to

reduce cost and

increase profit

Market at

Equilibrium

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generating more revenue and it will create sustainable culture which can be visible and respected by

market and customers. Below are examples of different types of values:

1. Profitability: Exon Mobile, Apple, Microsoft, JPMorgan Chase, etc.

2. Innovative: Apple, Google, Facebook, Walt Disney, etc.

3. Social and community involvement: Target, Toms Shoes, Whole Foods, BEN & JERRY'S, etc.

4. High culture: Google, Starbucks, Zappos, etc.

5. Durability: Toyota, GE, Anheuser-Busch, etc.

6. Global reach: Wal-Mart, BP, Royal Dutch Shell, Citi Bank, etc.

Reduce Cost:

Cost reduction is an art. Organizational Leadership plays very important role in defining and

controlling cost. In most cases, companies seriously think about cost reduction when they see bad

situation, it may be for global economic situation or reduction in client base or over spending or

unplanned expenditures. Most organization does cost reduction as part of reacting to the situation and

the Organizations faces this situation because they lag in taking proactive preventive measure.

Following are the few options to reduce cost by taking proactive preventive measure:

i. Reduce repetitive activities: Track repetitive activities within the team, group,

departments within the Organization and repetitive work by business partners. This

situation mostly happens when there is no definitive direction on work assignment.

Though companies should encourage in knowledge sharing, they should focus on

defining guideline on roles and responsibility very clearly. I feel repetitive work is one of

the main reason of confusion and delay in process. Reducing repetitive work may save

15% to 20% departmental budget.

ii. Vendor Management: I compare Organizations with less experience in vendor

management are like giving glass of milk in the hand of an infant- though milk is good

for health, still the infant will drop most of the milk. Outsourcing is good- It reduces cost

and increases product/service value. If the outsourcing vendors not managed and

coordinated properly, it will increase cost, create confusion and ultimately will reduce

Organizational value.

iii. Need-What-Don’t know: This is one of the other key factors of spending money without

cause. Organizations lags proper market analysis, does not understand what customer

need, based on some internet search and seeing what others doing jumps into

competition. Now business itself not clear about what they need, but they ask other

groups to start working on concept which no one understands, ultimately the product

ends of with failure or immature and increases expenses. In other cases departments

purchases products that they don’t know when they are going to user, without any

strategic planning in this direction, they spends money in buying the product but they

don’t use the product, later finally when they get ready for the product, the product

gets outdated.

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iv. Employee education to meet the need: Investing on education employees with

business need reduces cost and at the same times keeps the employees ready to

compete with market forces.

v. Healthy work culture: Better the work culture, happier are the employees and hence

increases productivity, which reduces cost.

Preparing future leaders:

This is one of the important aspects of maintaining Organizational sustainability and maintaining

Organizations value in market. Prepare next in-line leaders to carry forward the good initiatives and to

make previous initiatives even better.

Other deciding factors to increase value and profit to increase Organizational sustainability are:

Relationship- Keeping good relationship with various partners, vendors and customers are very

important, it will help serving the customer better. Better relationship will also increase customer

loyalty.

Look out for Game changers- Most of the times new entrepreneur who joins the market

competition are the game changers and not the big established Organizations. In some cases, big

Organizations gets benefited by entrepreneurial Organizations, Big Organizations quickly analyses the

future benefits of such innovative Organizations and they acquires the Organization to take advantage

of the innovative products.

Compete with your own products/services: It sounds strange, but this is the fact, if you will not

improve your own products/services and replace with new innovative products and services then

someone else will replace your product and services with new innovative or cost effective product. So to

continue dominating market with your products and services it is better you to take initiative and create

new benchmark.