The combination of all the activities undertaken by an organization to design, produce, market, deliver and support its products or services form the value chain of that organization. It comprises everything an organization does starting from the product development to delivering it to end user (Gamble, Petaraf, & Thompson, 2015). The activities in value chain are broadly classified into primary and secondary activities. The primary activities consists of supply chain management, operations, distribution, sales and marketing, service and profit margin that are necessary for creating value for customers. On the other hand, support activities consists of product research and development, technology and systems development, human resource management and general administration that facilitates the primary activities (Porter, 1985).
The findings on comparing the value chain of KP MacLane with the value chain depicted in Figure 4.1 are:
Among the primary value chain activities, labor costs accounts for the largest percentage of operating expenses. Out of the total operating costs of $ 29.57, about 37% i.e. $11.05 is spent on the wages, benefits, taxes, allowances and insurance of the labors. This shows that the company is emphasizing more on the utilization of available human resource for creating and delivering value to the customers.
I think all the supporting activities described in Figure 4.1 is necessary at KP MacLane. Innovation is the key to successful business. Since the tastes and preferences of the customers change over time, the company have to come up with new designs of polo shirt to meet the changing demand. Similarly, the quality improvement and cost reduction is also possible by investing in product research and technology and system development. From the table, we can see that labor cost accounts for the highest percentage of operating costs because of which the human resource management is also equally important to ensure that the company has right people in right place at right time to deliver the desired value by the customers. Similarly, the general administration needs to be effective to support the primary as well as secondary activities of technological development and human resource management of the firm. The administrative efficiency affects the performance of each and every units of the organization so it cannot be ignored either.
In order to secure and maintain the competitive advantage, the company should pay attention to both the primary and secondary activities of value chain as all of them are equally important. The effective supply chain management ensures availability or required inputs in right time and quantity, the operations ensures production of final product as desired, distribution assists in reaching to end users and cover market and sales and marketing helps in creating brand image of the company. In order to make all these primary activities more efficient, investment in research and development is necessary. It will also help in cos reduction and quality improvement.
Thus by the help of value chain activities, the company can generate profit by serving the customers in effective and efficient manner.
References
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
Porter, M. E. (1985). Competitive Advantage. New York: Free Press.
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The combination of all the activities undertaken by an organization to design, produce, market, deliver and support its products or services form the value chain of that organization. It comprises everything an organization does starting from the product development to delivering it to end user (Gamble, Petaraf, & Thompson, 2015). The activities in value chain are broadly classified into primary and secondary activities. The primary activities consists of supply chain management, operations, distribution, sales and marketing, service and profit margin that are necessary for creating value for customers. On the other hand, support activities consists of product research and development, technology and systems development, human resource management and general administration that facilitates the primary activities (Porter, 1985).
The findings on comparing the value chain of KP MacLane with the value chain depicted in Figure 4.1 are:
Among the primary value chain activities, labor costs accounts for the largest percentage of operating expenses. Out of the total operating costs of $ 29.57, about 37% i.e. $11.05 is spent on the wages, benefits, taxes, allowances and insurance of the labors. This shows that the company is emphasizing more on the utilization of available human resource for creating and delivering value to the customers.
I think all the supporting activities described in Figure 4.1 is necessary at KP MacLane. Innovation is the key to successful business. Since the tastes and preferences of the customers change over time, the company have to come up with new designs of polo shirt to meet the changing demand. Similarly, the quality improvement and cost reduction is also possible by investing in product research and technology and system development. From the table, we can see that labor cost accounts for the highest percentage of operating costs because of which the human resource management is also equally important to ensure that the company has right people in right place at right time to deliver the desired value by the customers. Similarly, the general administration needs to be effective to support the primary as well as secondary activities of technological development and human resource management of the firm. The administrative efficiency affects the performance of each and every units of the organization so it cannot be ignored either.
In order to secure and maintain the competitive advantage, the company should pay attention to both the primary and secondary activities of value chain as all of them are equally important. The effective supply chain management ensures availability or required inputs in right time and quantity, the operations ensures production of final product as desired, distribution assists in reaching to end users and cover market and sales and marketing helps in creating brand image of the company. In order to make all these primary activities more efficient, investment in research and development is necessary. It will also help in cos reduction and quality improvement.
Thus by the help of value chain activities, the company can generate profit by serving the customers in effective and efficient manner.
References
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
Porter, M. E. (1985). Competitive Advantage. New York: Free Press.