Value Chain Analysis is a strategic toolused to analyze the strength and weakness of internal firm activities. There arevalue chain and support activities that should be analysed, while each activityshould be examined through competitor’s abilities.
Therefore, the firm thatcompetes through differentiation advantage will try to perform its activitiesbetter than competitors would do. If it competes through cost advantage, itwill try to perform internal activities at lower costs than competitors woulddo. When a company is capable of producing goods at lower costs than the marketprice or to provide superior products, it earns profits.
Value chain activities arethe activities the firms’ complete produce products and sell, distribute, andservice in the ways that create value or customers. There have five primary activities which are Supply-Chain Managementthat handles sourcing, procurement, conversion, and logistics management thatnecessary for the firm to receive raw materials and convert them into the finalproduct. Forexample, Perodua has a good relationship with suppliers and the company providethe Electronic Supplier Information & Management System (e-SIMS) to reachit supplier. Personnel are well trained for overseeing the transit of goodswhile 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 theactivity that relates the final products to customers which efficientlyhandling customers’ orders, choosing the delivery channel and working with the financialsupport for customers’ payments. For example, if there has a customer order carsin Perodua, employees need to efficiently handle their orders and arrange thecustomers to make payment.
Marketingincluding Sales is the activities that target customer on the basis ofsatisfying customers’ needs and locate the additional customer. For example, the Perodua has conducted various campaign andpromotions activities. They also provide panel of finance and insurance forcustomers. Besides that, they also providing structured approach to understandthe requirements of customers and the showrooms is available for nationwideincluding United Kingdom, Singapore, Brunei and Fuji Island. Operations are theactivities that developing employees’ working schedule, designing productionprocess and determining production capacity needs in order to change the rawmaterials 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 themanufacturing of Perodua vehicles while Perodua Engine Manufacturing Sdn Bhdundertakes all assembly of the vehicle engine and also manufacturing ofselected engine components parts. They also provide adequate of training toensure stable source of skilled manpower and still continuous drive to improveefficiencies of Kanban and Kaizen system.
Lastly is the Follow-up Service is theactivities that taken to increase a product’s value for customers. For example, Perodua keep the product or service workingeffectively for the customers after it is sold and delivered. Serviceinformation and service package such as body repair and paint centres areavailable for nationwide for the customer. Besides that, the advantage forusing Perodua Car products is easy availability to find the spare parts. Besides that, procurement,human resource, and management information system is the support functions whichtheir activities in the firm can create customers value through work being doneto produce, sell, distribute, and service the products when firm is producing. For example in Perodua Company, the procurement supportdepartment will be finding out what resources that firm needs to operate andnegotiating with vendors the best prices.
In other hand, e-SIMS aims toestablish smart business partnership and develop more opportunities locaaly andglobally by being able to response effectively and efficiently through supplychain technology. Besides that, human resource department will associatewith managing the firm’s human capital such as employs the workers andretraining in ways that create a capability. Forexample, Perodua believe that efficient human resource is vital in achievingthe company mission. They encourage employees to be in teamwork so that candevelop ideas for greater efficiency and productivity. Besides that, Peroduahas provided a conducive working environment and reward their staff byconstantly reviewing their performance and upgrading the benefits ofcompany.
Lastly is the managementinformation system which obtains and manage the information and knowledgethroughout the firm such as determine the ways to collect and distributeknowledge by linking relevant information and knowledge to organizationalfunctions. For example, Perodua has investedsubstantially amount in manpower of IT software for its R&D activitieswhich the main activities are localisation of car parts and components, stylingand modelling of future models and facelifts of current product range.