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Activity Baseline & AnalysisView Template for: SHU Activity Baseline and Analysis The purpose of this section is to understand the cost dynamics of each strategically significant activity, as well as to examine how that activity can potentially make the product or service unique. In practice, it is usually sufficient to analyze in detail the four most important activities of the horizontal unit. Limiting this analysis to four key activities will help ensure that the task is not rushed in order to just finish it. In theory, every significant activity can (and eventually should) be analyzed for improvement. From Michael Porter's Competitive Advantage, cost drivers are the structural factors that influence cost and can be more or less under a firm's control. Uniqueness drivers are the underlying reasons why an activity is unique. (Refer to the glossary at the end of this book for definitions of the cost and uniqueness drivers listed below.) The cost and uniqueness drivers should be viewed as a simple checklist to help analyze why an activity is relatively more or less costly and how it leads to more or less uniqueness. If one or more cost drivers or uniqueness drivers has no impact on a particular activity, leave it out. An alternative format to the one shown on the template web page is presented below. In practice, this is an excellent group exercise. For a given activity, first rank the impact of each cost and uniqueness driver from "Very High" to "Very Low." Then discuss why each driver is or is not important to that activity. Finally, for those drivers which have a big impact, discuss how performance of that activity can be optimized by controlling that driver. Alternative Format to the One Shown on the Template Page ACTIVITY NAME:
The plan for this activity to lower costs and / or to enhance differentiation is to.... |
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