Strategic_Management. Is it accurate to claim that all organizations add value if they are successful?

University Degree Business and Administrative studies

Title : “Is it accurate to claim that all organizations

add value if they are successful?”

Subject : Strategy Management

Submission : FEBURARY, 2009.

VALUE CHAIN

Value Chain is described as the chain of interlinked activities which

adds value to the economic business strategy to create competitive advantageous benefits with sustaining best performance which holds a withstanding profit. The Value chain, also known as Value chain analysis, is a concept from business management that was first described and popularized by Michael Porter 1985(Book : Competitive Advantage).

Michael Porter’s Generic Value chain

Inbound Logistics → Operations → Outbound Logistics → Marketing &

Sales → Service

Supporting Factors

Firm Infrastructure

Human Resource Management

Technological Development

Procurement

Inbound logistics

The major component of value chain analysis is the input of raw materials.

The materials being properly received with its numerical and storage data which is stored in warehouse by systematic promulgate dissemination and logistical operation in distribution of materials to requirements.

Operations

The component which is the functional instance to create an efficient production activity in transforming the inputs to finished products.

Outbound Logistics

The aspect of operational management that deals with the procurement, distribution, maintenance, and replacement of warehouse materials to finished product.

Marketing & Sales

The constituent of the value chain analysis which researches about the consumer needs and discovers the factors of introducing, advertising and marketing the finished goods to identify the sales promoting factors which maintain a sustainable profit and generation of sales.

Services

The service is the main criteria to sustain the superior performance and profit. The customer satisfaction and feedback after the product being sold is fairly important to analyze the business winning strategy.

The value chain major components are supported by the factors such as infrastructure, HR management, Technological management & Procurement to substantiate a profit margin in the business.

Infrastructure:

Infrastructure is an underlying base, foundation or frame work which is said to be the fundamental facilities in any firm. The infrastructural growth for tourism and hospitality industry is very high and prosperous for countries like France since France is one of the most visited countries in the world, with almost 75 million tourists each year in terms of income derived from tourism, France is ranked third. Since U.K is looking forward to host 2012 Olympics, the tourism infrastructure is on the process of its foundation. The infrastructures like building new hotels and Restaurants expanding the existing hotels and restaurants, growth in the transport sector like more flights trains buses cars leading to the increase in its infrastructures and so on

Human Resources Management:

The Management team which withholds and maintains the entire administrative activities such as planning, recruitment, employee selection, orientation, job allocation, motivation, remuneration, training, appraisal, Compensation etc.

Technological Management:

can also be defined as the integrated planning, design, optimization, operation and control of technological products, processes and services, a better definition would be the management of the use of technology for human advantage.

Procurement:

The complete action or process of acquired or obtaining personnel material services or properties. In case of Government or other an Industry it is obtaining ...

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Human Resources Management:

Technological Management:

Procurement:

The complete action or process of acquired or obtaining personnel material services or properties. In case of Government or other an Industry it is obtaining the raw materials for production, personals for work like Government or other agencies to carryout certain tasks for establishment or expansion of that industry. In the hospitality and tourism industry. The procurement is made by arguing more hotels, stadiums, housing, Restaurants, entertainment centers, new roads, transport facilities like flights, cruises, automobiles, shopping buying more foods, materials and beverages both from local and import, cooking infrastructures, packing materials, obtaining or skilled personals or labor, obtaining more services for communication for information and software sector and so on.

Contribution of Value Chain in Business Strategy

The ultimate success of the business depends on the firms’ margin or profit. services should be less than the amount customer is ready to pay for the total cost of the individual parts of the value chain like procurement, operations storage, and marketing ,sales and product or service, so very high concentration and co ordination of the value chain activities and coordination of the value chain activities and reconfiguration is a must for achieving the goal of offering the customer a high quality product or service that is less than the cost of all value chain activities together. This strategy of linking the value chain activities and constant reviewing for better quality and high standard at the same time not compromising the profit margin is very highly essential. for example procurement of raw materials may be sourced from imports, instead of local based on price, availability and quality, the operation and manufacturing may be done directly by the company or outsource through other agents based on the cost of production same way distribution and warehousing marketing sales and service can be done by the company directly or by other agencies. All the value chain activities shall be well coordinated and managed to produce the best desired result and of course the profit.

Value chain strategy in restaurant Industry

In restaurant industry strategic management of value chain activities means a lot for a continued profit and success.

Inbound Logistics (Restaurant)

To input of raw materials and distribution of product to the kitchen describes the basic inbound logistics activity. The logistical factors of input includes Examining the goods, Quantity list checking, Quality Testing, Material storage planning, Hygiene maintenance, safety handling of items, Safety storage, ,Prioritized Assembling of goods, detailed storage data and expiry/start date information, Communication, Transportation ,Right Material supply for utility, Updating the distributed data, Systematic demand analyzing distribution.

Operation (Restaurant)

The art of cooking should be fast, up to the standard, clean, hygienic and of course tasty. The complete operation process of transmuting the ingredients to finest recipe is the operation activity. The successful operation is followed by Communication, Material handing, experienced working, Perfect work tools and appliances, Hygiene and cleanliness, Quality and Quantity testing, Safety maintenance, Packing and Presentation.

Outbound logistics (Restaurant)

The Logistical factors such as restoring the excess, data maintenance, safety handling, supervising operation, Updating storage and material request information, checking ,crisis management, Alternate material arrangement, The timely heating, freezing, storing the cooked meal and an excellent presentation of the same is very important activity in this chain. Quality maintenance, Product approval, will add value to the restaurant strategy.

Marketing & Sales (Restaurant)

The major profit sustaining factor after the birth of product or restaurant launch is marketing and sales promotion. Customer expectation is the top most priority in marketing. The staff, quantity of food, restaurant space and customer facilities shall be adequate based on the quantum of customers expected. Pleasing manners of the staff, Taste of the food being served, introduction of new foods often and customer’s aesthetic feeling while in restaurant always increase the customer number and profit. The key knowledge will improve and stabilize the industry beyond its competitors. The components such as consumer need updates, Trend information relevant to the restaurant type. Focus on customer satisfaction and choice, attractive lively environment, reasonable pricing, Advertisements in media, restaurant timing, Differentiation in food, atmosphere & presentation, Comfort improves profit and motivates the business strategy.

Service (Restaurant)

The value chain factor which helps for the sustainability of superior performance and profit is service. To serve the finished recipe with appealing presentation and apply changes in request up to customer needs and aim for the customer feedback and satisfaction. The customer shall be provided with good packing and take away facilities, home catering and door delivery options. Availability of information to the customers on the menu, prices, facilities, and choices, daily specials through online and media advertisements and receiving feedback must be a continuous task.

Infrastructure (Restaurant)

The Firm strong substructure would stabilize the industry and its life span. The basic facilities and foundational requirements being systematically planned and built in its capital investment will be responsible for the proper functioning of the restaurant. The features such as organizational structure, executed control systems, Location and building, safety factors, full term kitchen appliances, cooking machines, serving equipments(plates, cups, vessels, table sets etc) will support for a visible growth and functioning of the restaurant. While obtaining the infrastructure for this restaurant industry like building the location and size of the buildings shall be based on the marketing survey information on customer availability, customer liking for the food say British, Chinese, Caribbean, Indian, Italian, and Mexican and so on.

To maintain a sustainable profit and optimized performance in the Restaurant field, interlinked activities with its pillared supporting factors are followed which makes the restaurant industry competitive and profitable.

Human Resource Management (Restaurant)

The HR Management is the pillar of the restaurant industry. The skilled workers, Honest Management staffs, dedicated employees are the one who form the firm. The Recruitment must be with clarity and skill oriented. Job allocation and salary planning must be relevant to demand and profit margin which is employee satisfactory as well, Training to perfection, neutralize the employee benefits and profit margin, motivation, appreciation and acceptance of new innovation will prolong the standard and raise the profit. The beneficiary allowance and facilities will entertain the chef under work force. The substitute workers must be allocated in alternate or wanting of more workers, the cooperation and communication must be trained to lead in the same path.

Technological Management (Restaurant)

The Advancement factor which gives the competing power is the development in technology. The improvement in machineries, awareness, etc supports the primary value chain activities and increases the profit margin. Time saving kitchen appliances, easy transportation, energy saving plans, executing less fuel and electricity consumption, Information technology, Advertising media techniques helps to promote sales. Architecture and engineering helps to build a attractive restaurant atmosphere up to choice and trend. The optimizing safety factors helps to prevent accidents or damage. The skilled management team will assure profit uplift.

Procurement (Restaurant)

The procurement of food raw materials, frozen foods, beverages and prepared foods should be made locally or by import based on availability, price and quality, choosing the right stuff, purchase of quality materials, picking things in budget, transportation, packaged for safety storage, proper warehousing/storing and freezing facilities must be available in restaurant for maintaining quality of food and raw materials.

Personal experience:

The effects of value chain strategy was achieved by changing the name of the restaurant from masala king to dosa special and improving various customer services, attractive menu, skillful procurement and marketing, staff courtesy and appealing presentation of food has resulted 60% increase in customers and raise in profit as well. In this present scenario maintaining the customer base is very important. The decrease in customer flow will definitely affect the bottom line of the restaurant, so I was able to maintain the regularity of the customers to this restaurant by seasonal offers, incentives, gift vouchers, joint ventures with other concerns, motivation resulting in customers referring their friends. Thus these improvised and innovative strategies have added an extra edge in marketing campaign and lift in profit margin.

Conclusion

The world has become very small. The technological growth leading to a wide and fast communication, the highest awareness, the advertisement wave and the availability of food/materials/services on customer’s choice and very high industrial competition has forced all organizations to add value to their firms for survival and success. The organizations which do not add values to their business are not able to sustain the growth and disappear over a period of time.

References: