[8] 2002 e-business-strategies-for-virtual-organizations

Evaluating strategies for e-business change
In truth very few examples can be found of organizations who
apply a fully comprehensive approach to measuring value –
particularly in regard to intellectual assets. Whatever the
approach, consideration should be given to the organizational
level of implementation. Generally it is most successful at the
smallest replicable unit in the organization. This can be a process
rather than a functional department. Micro-units permit the
highest possible degree of segmentation, strategic fine-tuning,
value added and customer satisfaction at the lowest cost. The
larger the organization the more refined are these replicable
units and the greater their leverage for creating added value.
8.6 Value measurement
8.6.1 Strategic value analysis (SVA)
Competitive advantage in the marketplace ultimately derives
from providing better customer value for equivalent cost or
equivalent customer value for a lower cost – the standard
differentiation or lower cost strategic choice. Occasionally, but
rarely, a company achieves both by providing better value at a
lower cost such as in the case of Microsoft with Windows 95.
Regardless of strategic focus the organization needs to measure
the added value across the whole value chain to determine
exactly where in the chain customer value can be enhanced or
costs lowered. This includes linkages upstream as well as
downstream in the overall value alliance. The value chain
analysis will break down the chain from basic raw materials to
end-use customers into strategically relevant activities in order
to understand the behaviour of costs and the sources of
differentiation. Since no two companies compete in exactly the
same set of markets with exactly the same set of suppliers, the
positioning within the overall value chain for each company is
unique.
SVA is a technique for quantifying business issues and opportunities
across the entire value chain for an industry and differs
in two important ways from traditional business analysis:
� SVA disaggregates activities into the fundamental building
blocks of the full value chain, from suppliers to consumers,
and then groups these activities consistent with the way
markets actually work.
� SVA evaluates each stage of the chain on an economic value
basis eliminating problems caused by historical cost, transfer
prices and accrual-based accounting.
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