Value Chain Analysis

Topics: Value chain, Management, Supply chain Pages: 10 (3387 words) Published: April 12, 2014
Table of Contents

Page No.
Question 1: Describe and explain the value chain of this organisation. Use value chain theory and the examples from the articles to do this. 3

Question 2: Draw a flow diagram that explains the flow of activities and materials (in the case of a manufacturing operation) or the flow of activities and people (in the case of a service organisation) in the value chain process. Use any of the processes described in the textbooks or the articles as a guideline to draw the diagram. Your diagram must be as detailed as possible. The diagram should be accompanied with a description of the activities in the process. 10



Question 1
Botlhe Group is a private supermarket chain operating in Botswana. They operate several supermarkets across the country. For the assignment we will be focusing on the Botlhe Francistown supermarket that is located in the North East district. It is located in the city of Francistown in a residential area called Molapo Estates. It also caters to other surrounding residential areas. The groups headquarters are located in Gaborone and overseas the operation of all the stores and makes the strategic decisions that affect all its supermarkets. There are also regional headquarters in every district that directly liaise with the supermarkets in their district and function as the warehouse and distribution centres for the district. Botlhe Francistown is relatively independent in its operation to satisfy the needs of its customers. A supermarket is a business enterprise that provides a service. It does not produce a physical product of its own, it adds value by acquiring existing products from remotely-located suppliers, assembling them in regional warehouses, distributing them to local stores, and finally selling the supplier’s products to local customers (Steeneken & Arckley 2012:2). The service sector aims to optimally allocate the limited resources to design a service system that can satisfy customers’ needs and accrue high productivity (Chuang 2007:92). The value chain of Botlhe Francistown describes the activities in the business that delivers value to a market. We will be adapting the Porter’s value chain model as depicted in the University of South Africa’s study guide (2014: 12) to break down the activities in the value chain and formulate a value chain analysis focusing on the supermarket. There are two categories in the model: firstly, primary activities; inbound logistics, operations, outbound logistics, marketing and sales, and after sales service. Secondly, secondary activities: infrastructure, human resource management, technology development and procurement. The margins are the profits that results from well-designed primary and secondary value chain activities and depend on how well the firm’s primary activities add value to the market so that the amount of the customers are willing to pay exceeds the cost of the activities in the value chain (Hill 2012:375). Primary Activities:

Inbound Logistics:
Inbound logistics can be described as all the activities that are responsible for the purchasing, transportation, warehousing and management of the products and services needed by the organisation in order to satisfy the needs of its customers (Vogel 2006: 131-132). Therefore this activity works hand in hand with the procurement support activity described later in the assignment. It is very important Botlhe Francistown as it is the beginning of its value creation. Efficiency in this activity directly impacts the profit margins of the supermarket. Inbound logistics is responsible for inventory management, focusing on maintaining optimal inventory levels as they directly affect customer service and the competitiveness of the supermarket (Vogel 2008). In the context of Botlhe Francistown, the policy of the group is that the stores tracks its own product levels through the use of an inventory barcode management system and...

References: Bennett, J.A. 2006. “Marketing Managment” In: Nieman, G. and Bennett, A. eds. Business Management A Value Chain Approach. Pretoria: Van Schaik. 158 – 184.
Crain, D.W., Abraham, S., 2008. “Using value-chain analysis to discover customers strategic needs”, Strategy and Leadership, 36(4).
Chuang, P.. 2007. Combining Service Blueprint and FMEA for Service Design. Online, vol.27 no.2 pg 91 – 104. [Cited 24 February 2014].
Chou, C., Chen, C., Conley, C. 2012. A systematic approach to generate service model for sustainability. Journal of Cleaner Production 29-30. pg 173e187.
Hill, Arthur V. 2012. The Encyclopaedia of Operations Management: A Field Manual and Glossary of Operations Management Terms and Concepts. Upper saddle River: Pearson Education.
Lessing N. and Jacobs, H. 2006. “Introduction to business management: a value chain perspective” In: Nieman, G. and Bennett, A. eds. Business Management: A Value Chain Approach. Pretoria: Van Schaik. 3 – 25.
Marx, A.E.. 2006. “Human Resource Management” In: Nieman, G. and Bennett, A. eds. Business Management: A Value Chain Approach. Pretoria: Van Schaik. 243 – 265.
Mohammed, I.R., Shankar, R., Banwet, D.K.. 2008. Creating flex-lean-agile value chain by outsourcing, Business Process Management Journal 14(3). 338 – 389.
Nasr, N.,Eshghli A. & Ganguli, S.. 2012. Service Quality In Hybrid Services: A Con­sumer Value Chain Framework Journal of Services Research 12(1). 117 – 131.
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Vogel, A.J.
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