Value at lower costs than the market price

Value Chain Analysis is a strategic tool
used to analyze the strength and weakness of internal firm activities. There are
value chain and support activities that should be analysed, while each activity
should be examined through competitor’s abilities. Therefore, the firm that
competes through differentiation advantage will try to perform its activities
better than competitors would do. If it competes through cost advantage, it
will try to perform internal activities at lower costs than competitors would
do. When a company is capable of producing goods at lower costs than the market
price or to provide superior products, it earns profits.


Value chain activities are
the activities the firms’ complete produce products and sell, distribute, and
service in the ways that create value or customers.  There have five primary activities which are Supply-Chain Management
that handles sourcing, procurement, conversion, and logistics management that
necessary for the firm to receive raw materials and convert them into the final
product.  For
example, Perodua has a good relationship with suppliers and the company provide
the Electronic Supplier Information & Management System (e-SIMS) to reach
it supplier. Personnel are well trained for overseeing the transit of goods
while all the process is transparency and monitoring through deployment of IT.
There also have efficient storage of facilities to ease storage and retrieval. Distribution is the
activity that relates the final products to customers which efficiently
handling customers’ orders, choosing the delivery channel and working with the financial
support for customers’ payments. For example, if there has a customer order cars
in Perodua, employees need to efficiently handle their orders and arrange the
customers to make payment. Marketing
including Sales is the activities that target customer on the basis of
satisfying customers’ needs and locate the additional customer. For example, the Perodua has conducted various campaign and
promotions activities. They also provide panel of finance and insurance for
customers. Besides that, they also providing structured approach to understand
the requirements of customers and the showrooms is available for nationwide
including United Kingdom, Singapore, Brunei and Fuji Island. Operations are the
activities that developing employees’ working schedule, designing production
process and determining production capacity needs in order to change the raw
materials into finished products. For example,
professionalism of Perodua is implemented in all operations. Besides that,
Perodua Manufctuing Sdn Bhd is the company that responsible for the
manufacturing of Perodua vehicles while Perodua Engine Manufacturing Sdn Bhd
undertakes all assembly of the vehicle engine and also manufacturing of
selected engine components parts. They also provide adequate of training to
ensure stable source of skilled manpower and still continuous drive to improve
efficiencies of Kanban and Kaizen system. Lastly is the Follow-up Service is the
activities that taken to increase a product’s value for customers. For example, Perodua keep the product or service working
effectively for the customers after it is sold and delivered. Service
information and service package such as body repair and paint centres are
available for nationwide for the customer. Besides that, the advantage for
using Perodua Car products is easy availability to find the spare parts.

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Besides that, procurement,
human resource, and management information system is the support functions which
their activities in the firm can create customers value through work being done
to produce, sell, distribute, and service the products when firm is producing. For example in Perodua Company, the procurement support
department will be finding out what resources that firm needs to operate and
negotiating with vendors the best prices. In other hand, e-SIMS aims to
establish smart business partnership and develop more opportunities locaaly and
globally by being able to response effectively and efficiently through supply
chain technology. Besides that, human resource department will associate
with managing the firm’s human capital such as employs the workers and
retraining in ways that create a capability. For
example, Perodua believe that efficient human resource is vital in achieving
the company mission. They encourage employees to be in teamwork so that can
develop ideas for greater efficiency and productivity. Besides that, Perodua
has provided a conducive working environment and reward their staff by
constantly reviewing their performance and upgrading the benefits of
company.  Lastly is the management
information system which obtains and manage the information and knowledge
throughout the firm such as determine the ways to collect and distribute
knowledge by linking relevant information and knowledge to organizational
functions. For example, Perodua has invested
substantially amount in manpower of IT software for its R&D activities
which the main activities are localisation of car parts and components, styling
and modelling of future models and facelifts of current product range.


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