Describe value-chain process: core purpose, main requirements and activities

A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver something valuable (product or service). A business unit is appropriate level for construction of a value chain, not divisional or corporate level. Products pass through activities of a chain in order, and at each activity the product gains some value. Chain of activities gives the product more added value than sum of the independent activities' values. Six business functions of the Value Chain:

Research and Development

Design of Products, Services, or Processes

Production

Marketing & Sales

Distribution

Customer Service

Operational processes

consist of the activities related to the doing of business.

(i.e., marketing and intelligence processes, design and development processes, procurement and logistics processes, production processes, and product/service delivery processes)

Management processes

consist of the activities related to information processing, control, coordination, and communicationwithin organizations.

(i.e., information handling processes, coordination processes, control processes, communication processes, and knowledge processes)

Describe project controlling: core purpose, conditions of its effectiveness and ways how to improve it.

Project management is the discipline of planning, organizing, securing, managing, leading, and controlling resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables),[1] undertaken to meet unique goals and objectives

Project controlling should be established as an independent function in project management. It implements verification and controlling function during the processing of a project in order to reinforce the defined performance and formal goals.[28] The tasks of project controlling are also:

the creation of infrastructure for the supply of the right information and its update

the establishment of a way to communicate disparities of project parameters

the development of project information technology based on an intranet or the determination of a project key performance index system (KPI)

divergence analyses and generation of proposals for potential project regulations[29]

the establishment of methods to accomplish an appropriate the project structure, project workflow organization, project control and governance

creation of transparency among the project parameters[30]

Fulfillment and implementation of these tasks can be achieved by applying specific methods and instruments of project controlling. The following methods of project controlling can be applied:

investment analysis

cost–benefit analyses

value benefit Analysis

expert surveys

simulation calculations

risk-profile analyses

surcharge calculations

milestone trend analysis

cost trend analysis

target/actual-comparison

Describe KPI reporting process and give examples of main KPIs for different aspects of business activity.

KPI = Key Performance Indicator

KPIs aggregate multi-dimensional information in asingle measure for the purpose of

Planning

Coordination

Control

Incentives

There are three types of KPIs used in VBM systems

1. Profitability ratios are used for measuring the relative value realized in a particular period

Examples:

Return on Invested Capital (RoIC)

Cash Flow Return on Investment (CFRoI)  Simple and intuitive, but must be compared to hurdle rate (WACC)

2. Value creation measures determine residual profits and are used for measuring the absolute value realized in a particular period

Examples:

Economic Value Added (EVA)

Economic Profit (EP)

Cash Value Added (CVA)

Earnings less Risk-free Interest Charge (ERIC)

3/ Aggregated value measures are used for measuring the (change in) total value

Examples:

Discounted Cash Flow (DCF)

Market Value Added (MVA)

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