Importance of information value chain for a competitive business venture The Information Value Chain (IVC) is a concept developed by Sebastian Schwolow and Mikkel Jungfalk Andersen focusing on information, management, organisation and communication. Information is abundant and need to be filtered, managed for truly use as valuable information which is scarce, costs time and money. Effective management of information can reduce these costs and result in a true competitive advantage Producing, maintaining and nurturing valuable information requires a structured approach such as Information Value Chain.
IVC involves defining information Requirement, Acquisition, Processing and Distribution with the secondary support of HR, IT infrastructure, Knowledge Management and Information Governance to convert abundant information for valuable information for use or decision making.
How IVC Gives Competitive Advantage
An important concept that highlights the role of IVC in competition is the “value chain” by Michael E. Porter. This concept divides a company’s activities into the technologically and economically distinct activities it performs to do business. We call these as “value activities.” A business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation to charge premium price. (Porters Generic theory of Differentiation, Cost Leadership, Focus Strategy) Porters Value Chain Analysis (VCA) helps to identify sources of Sustainable Competitive Advantages (SCA) for a company over its competition by looking at the value activities in a broader perspective. Porter Identified a set of interrelated generic activities common to a firm namely Inbound Logistic, Operations, Outbound Logistics, Marketing & Sales and Service which facilitated by support activities such as Procurement, IT, HR and Infrastructure.
IVC helps to identify the sources of SCA in each Value activities in Porters VCA. By focusing each Primary Value Activities in the Porters Value Chain.
How well you identify, Acquire, Process and Distribute your information with proper Information Governance and Knowledge Management under each Value Activities such as Inbound Logistic, Operations, Outbound Logistics, Marketing & Sales and Service, against the competition will give you the sources of competitive advantage in much broader sense.