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SAMARPREET SINGH
BATCH A, 029, 3rd SEM
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Primary activities are directly involved in transforming inputs into outputs and in
delivery and after-sales support. These are generally also the line activities of the
organization. They include:
Inbound logisticsmaterial handling and warehousing;
Operationstransforming inputs into the final product;
Outbound logisticsorder processing and distribution;
Marketing and salescommunication, pricing and channel management; and
Serviceinstallation, repair and parts.
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each value creating process : The next step of internal cost analysis is to trace or
assign cost* and assets to each value-creating process identified. Although firms
maintain internal reports and cost accounting information, this information may not
align with their processes Companies might have to reclassify their data or conduct
SAMARPREET SINGH
BATCH A, 029, 3rd SEM
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SAMARPREET SINGH
BATCH A, 029, 3rd SEM
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Scope
Experience or learning
Technology
Complexity
Capacity utilisation
plant
Product configuration
Structural cost drivers consist of organisational factors that determine the economic
structure driving the cost of a firm's products. These cost drivers reflect a firm's longterm decisions, which position the firm in its industry and marketplace. Structural c
drivers may change. For example, large pharmaceutical companies enjoy economies c
scale that lowers their unit costs for expensive R&D.
SAMARPREET SINGH
BATCH A, 029, 3rd SEM
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BATCH A, 029, 3rd SEM
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BATCH A, 029, 3rd SEM
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CASE STUDY
PROCTER AND GAMBLE
Value Chain Analysis describes the activities that take place in a business and relates
them to an analysis of the competitive strength of the business. Value Chain Analysis
is one way of identifying which activities are best undertaken by a business and which
are best outsourced. It suggests that the activities of a business could be grouped under
two headings: primary activities and supporting activities.
1. Primary Activities - those that are directly concerned with creating and
delivering a product (e.g. component assembly).
Sourcing and Procurement (sourcing, supply planning, materials
procurement).
Relating this model to P&Gs case study, it could be implied that P&Gs raw
materials are sourced and/or procured from all over the world, wherever it would
be cost-effective. It is thus no surprise that for a number of years it had focused
on ways to improve supply chain efficiency and costs. It now has a powerful
industrial network linking electronically to major suppliers and customers. This
is to the extent that it changed companies when efforts to reduce inventory levels
only produced marginal improvements. This led to the introduction of agentbased modelling.
Operations (assembly, branch operations)
P&Gs operations had four business units: health and beauty, babies, snacks and
beverages, and fabric and home care. It offered more than 300 products
including major brands like Tide. It has been aggressively using product
lifecycle
management software since 2000 for new product development. The company
uses MatrixOne software for mechanising and automating the knowledge
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BATCH A, 029, 3rd SEM
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