Jan 11
3
Defining the Ostrich Farming Value Chain
Michael Porter was the first to clearly define the importance of identifying the Value Chain to support the development of a business plan and assist in the development of the business model most suitable for the business - this goes for all business including ostrich farming.
The value chain identifies the generic value-adding activities of the business. When building the business plan it is important to identify the activities essential to developing the value of that business. The costs and value drivers are identified for each value activity. Establishing and analyzing the value chain framework of your business is a powerful management tool for strategic planning. Its ultimate goal is to maximize value creation while minimizing costs.
Simplistic Ostrich Value Chain
This graphic is a simplistic analysis to illustrate stages of ostrich production that add value from the starting point of production, ostrich farming, to the point where our consumers pay for our product. The end goal is access to a consumer who wants our product at a quality they demand, a price that is acceptable to them but still affordable to produce.
When discussing the Value Chain, it is worth defining the difference in a Value Chain and Supply Chain as these can be confusing, but the difference is significant.
A Supply Chain is where each element of the process to the end consumer is defining their section of the process as the product. In a supply chain each element along that chain are price takers. They purchase at the lowest market price and sell at the best price achievable. There is no collaboration, communication or working to set standards to produce a consistent product. Buyers will purchase on the open market. There will be no contracts in place.
A Value Chain is where there is collaboration between all processes in the supply chain to ensure that there is no leakage of value through poor performance of one link in that chain. A Value Chain is an alliance of enterprises collaborating vertically to achieve a more rewarding position in the market.
A strong reason to develop the value chain approach is the ever increasing requirement for full traceability. Vertical integration can be achieved either by single companies having total control of all aspects or through the value chain approach were each sector remains independent, but yet interdependent businesses working in collaboration with a common goal. That common goal optimizes the value for all in the chain.
As for all agricultural activities, including ostrich farming, adapting a value chain approach helps install consumer confidence for which they are normally willing to pay premium prices.
