There are two different approaches to analyze value chains.

The Analytical Approach

This approach is based on analytical work conducted by consultants or academics, based on a combination of fieldwork and literature review. With this approach, it is possible to address a given value chain from seven different angles, as shown in the following table

	Technical function	Organizations
Materials flow	Technical sequence of production process	Organizations involved in the production process
Knowledge flow	Sources and destinations of technology and knowledge	Organizations generating and using technology and knowledge
Monetary flow	Financial instruments	Monetary flows among organizations
Power structure		Organizations exerting power in the value chain

Let us look at the first line to illustrate why the distinction between "technical function" and "organizations" is important. Take the example of the textiles and garments industry. The technical structure of the production process is straightforward: starting with spinning, followed by weaving, dyeing, benefiting, cutting, sewing and packaging. In some places, all these activities are executed within a given company. In other places, they are distributed among a variety of companies which specialize on just one part of the production process. In the first case, the value chain is an intra-company affair. In the second case, it involves a number of companies. Understanding your local reality, and the reasons behind your local structure, will take you a first step towards formulating practical activities to stimulate the competitiveness of the value chain at large, in particular by sorting out problems at the main bottlenecks of the chain.

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