Value Chain Analysis

Topics: Michael Porter, Bottle, Strategic management Pages: 6 (1734 words) Published: August 31, 2013
Michael Porter’s value chain analysis describes how particular resource categories contribute to the firm’s strategic performance. Demonstrate how this can be done using examples from an organization of your choice.

Michael Porter introduced the value chain analysis concept in his 1985 book the Competitive Advantage. Porter suggested that activities within an organization add value to the service and products that the organization produces and all these activities should be run at optimum level if the organization is to gain any real competitive advantage (Lynch 2003). If they run efficiently the value obtained should exceed the cost of running ie customers should return to the organization and transact freely and willingly. Porter suggested that the organization is split into primary activities and supportive activities.

According to Pathania - Jain 2001, the value chain frame work of Porter is an interdependent system or network of activities, connecte d by linkages. When the system is managed carefully the linkages can be a vital source competitive advantage.

This refers to all activities related to receiving goods from suppliers, decisions about the transportation, scheduling, storing the goods as inventory managing the inventory and making the inputs ready to use for the productions. Delta engaged in contract farming where they provide inputs to farmers in the production of sorghum so that they are assured of continuous availability of their key resource. Delta has a stake in Kwekwe Malting which produces barley maltings which is a key input in the production of opaque beer. Their relationship with Kwekwe Malting will ensure a reliable and consistent supply of the raw material to facilitate continuous production thereby minimizing bottlenecks in the production process. Engaging Kwekwe Malting as a sole supplier acts as a cost saving strategy as they buy at concessionary prices. Having access to cheaper raw materials will reduce the production cost per unit which will allow other primary activities to build on. This boosts the profit margins thereby fueling inbound logistics activities. Delta Beverages engages in multi sourcing of raw materials from different suppliers. For instance maize from local farmers, yeast from Anchor Yeast, glass from ZimGlass and cans from CMB. Multi sourcing enables the organization to network with different suppliers. This enables the organization to network with different suppliers thereby enabling the organization to get favourable prices and limiting stock outs. OPERATIONS

Operations include the production process, development activites, testing packaging, maintenance and all other activities that transform the inputs into finished goods. Delta Corporation of Zimbabwe owns the Mega Pak which manufactures Polythene Enhanced Telephthalate plastics. These are injection and blow moulder plastic products for the packaging of beverages for example the 1 litre, 2 litre and 500ml cool drinks eg Fanta ,Coke, Sprite and water. The use of plastic bottles is a cost containment measure since the company has been facing challenges with the glass bottles in terms of cost. Zim Glass, the major glass bottle supplier’s temporary closure erratic production and poor quality products had compelled Delta to import the glass bottle from D.R.C thereby increasing its costs. This new development of manufacturing plastic containers goes a long way in reducing costs and ensuring that packaging material is readily available at all times.

This is when the finished products are developed using the products related activites. Once products have been manufactured they are ready to be distributed to distribution centres ,wholesalers ,retailers or customers. Distribution of finished goods is known as outbound logistics ( Delta Beverages has got 26 workshops ,38 Delta Beverage centres which are...
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