Value Chain Analysis: Pizza Hut

“Knowing yourself is start of all wisdom” says Socrates and I am wondering how true the saying holds in the world of business analysis. If today you want to win over your competitors then, knowing them inside out isn’t sufficed. You should know inside outs of your business first.

And, whenever you embark onto the journey of understanding your business, you carry the tool knows as “Value Chain Analysis” in your lever box at the top. The concept was introduced by Michael Porter, in 1985, in his influential book “Competitive Advantage”.

Porter, in his book, proposed a generic value chain model – divided into primary and support activities –that fits to a wide range of firms. The value chain analysis stays you out of the “no profit zone” by

The computerized coffee roasters of Starbuck’s help them maintain the consistency in taste in their outlets around the world. Pizza Hut utilizes a database of customer so that they can be contacted on festivals and for the promotion offers and increases the footsteps in their outlets. Domino’s use patented Domino’s Heatwave® that keeps a pizza oven-hot till it hits the customer’s door.

These are few among many of the fine examples where use of technology helped an organization to derive more value.

Role of Intellectual Property and Patents in Value Chain Analysis

It is obvious to discuss patents, in particular and intellectual property, in general, while we are talking technology. Intellectual property plays an important role in value chain analysis and helps generate a revenue stream.

You can leverage the power of patents to protect the innovation at different stages of the value chain of your business i.e. from earlier stage of R&D to the stages that occur at the end. So let’s discuss the four chief stages where use of patents can help your business drives more values. The stages are as follow:

• The R&D Phase of the Value Chain

• The High-Profit Phase of the Value Chain

• The Upstream

Many of the ideas generated during the R&D phase use to be patentable inventions that you should file patents for so that you can distinguish your products from others. However, before going for patent filing, you should go for a patent landscape study that gives you an insight of the potential competitors, barriers to your invention, and already existing products in the market.

This will help you to streamline your efforts in right direction and averts waste of money and resources on developing an already existing product.

The Upstream Phase of the Value Chain

The upstream phase is a part of R&D phase. You are not always best suited to commercialize your technology. For example, Motorola invented display screens that made mobile phone screens less expensive and better. However, Motorola being a telecommunication company couldn’t achieve economies of scale by manufacturing the display screens. Hence, it licensed its display technology to Universal Display.

This move, later, ensured both a revenue stream generated from patent licensing and an access to lost cost displays to Motorola.

The High-Profit Phase of the Value