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Updated on August 12, 2011

Value chain and strategic gap analysis

Teacher Education Handbook

In value chain analysis it is important to know what current and potential customers value most. It is important to note if the value chain activities are creating customer value. These include primary and supportive activities

Primary value chain activities are those activities that are fundamental in obtaining the services or products. Primary value chain activities include input logistics, production output logistics, marketing and sales and also after sale services.

Supportive activities include company infrastructure, human resource management, and value added technology among others.

A manager will have to look at all the above elements in order to conduct a successful value chain analysis of the organisation.

Where the company is doing well in one element it is noted as strength and where it is doing badly/poorly in another element it is noted as a weakness

Value chain process

a) Determine the strategic area to be considered. This can be sales or marketing or production, transportation e.t.c

b) Trace the value chain activities. It would be wise to concentrate on the primary activities first.

c) List key success factors. This enables you to understand the firms strengths

d) Identify those activities whose cost can be reduced without impacting on perceived value.

e) Identify inter relationships between activities and note possible ways to improve on such relationships.


This involves a futuristic strategic gap in performance. This involves some proactive control/management and hands on also involves comparing current performance with expected performance and seeking to close the gap If it is there, what new strategies to we need to correct this gap. Where the gap is identified the management should set new strategies to correct or narrow or close the gap.

Process of GP Analysis

o Set a target

o Make a forecast

o If the forecast is different from the target there is a gap.

o Take action to bring forecast closer to target


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