This assessment will cover following questions:
- Explain the value chain model proposed by porter?
- What are the internal and external factors that impacts the working of organisation?
One of the important aspect of any organization is called business environment. External institutions, investors, economic conditions, consumers, government, media, competitors as well as suppliers are the various forces which contributes in the business environment of any business. More over, a business is greatly influenced by the total sum of internal and external factors of the organization. Additional, in this report it has been discussed the value chain model which has been proposed by the researcher Porter in 1985, followed by the description of the company Tesco as well as implementation of value chain model of porter 1985 on the company Tesco. Furthermore, this report consist of reflection of the value chain model of Porter (Brink, 2017).
Task 1 Value chain model proposed by porter 1985
For the value creation process, companies widely applies the model which is known as portor's model of value chain. As suggested by porter, every activity or function of the company has the contribution in cost positioning of the product as well as these activities creates basis for the product differentiation from its competitors. Moreover, it suggested that, by looking at the complete organization competitive advantages can't be understood, else the various activities of the company such as support, delivery, marketing, production and designing activities matters in company's competitive advantages.
According to the researchers, profitability of the companies are not only the functions of conditions of the industry, instead it depends on the values it creates for its competitors too. Therefore, a company's competitive advantage is not only the function of the positive value it creates but also the additional value it tends to create for its competitors by showing its advanced capabilities.
In order to have sustainable competitive advantages, the researcher porter had examined various activities performed by an organization and found the interaction between those activities. Thus, these all facilitated in identifying the core and non-core activities performed by the organization as this has separated the sequential stream of the activities in order to deliver the ideal final service or product (Ang and et.al, 2015).
There are basically two activities performed by an organization are primary and secondary where primary are value chain or core while the secondary are the supplementary one. Thus, in order to have sustainable competitive advantages, organizations tends to identify the activities which are core and furthermore, in order to have additional competitive advantages they find out the activities which are cheaper than their competitors or being capable to commands on premium price as well as superior customers value in a unique value.
Therefore, according to the Porters value chain framework the two categories or activities are as follows
Primary activities are the activities which has the involvement in products or service production as well as in selling. Thus, these are considered to be the most important activities which tends to add value to the product as they had involvement in products physical creation. Therefore, the activities included in this are sales and marketing, outbound and inbound logistics, operations, after sale service as well as sales and distributions.
These activities include the infrastructures, Human Resource Management, technology developments as well as procurements as these activities tends to provide required assistances for primary activities to take place successfully.
Task 2 Description of the company Tesco
The company Tesco has been situated United Kingdom. The company serves as an multinational retailer company which is dealing in large number of retail products. In order to attract its huge customer base as well as to maintain its market share in the UK's industry i.e. 28.6%, the company has adopted several strategies. There are more than 6350 outlets in which around more than 5 lakh workers are working in order to organize the smooth functioning of the organization Tesco. Moreover, in order to enjoy competitive advantages the company has adopted several advanced strategies. The top four competitors of the company Tesco in United Kingdom are Sainsbury, Morrisons and Asda. Moreover, the company has expanded its reach in monetary and banking services too for enhancing its total market share. Additionally, the company has gained it reputation as one of the most reliable online retailer in United Kingdom (Cepel and et.al 2018).
The various sectors in which the company has diversified its area of services are internet services, telecom, financial services, software, petrol, toys, furnitures, electronics, clothing, books as well as several other retailing area of services. One of the strategy effectively applied by the company Tesco in order to enhance its customer base by being cost leader at the same time providing the best possible quality, more over, the company carries out strategic management analysis for enhanising its competitive advantage. For this Tesco has analysed the market environment through Porter's five force as well as through PESTEL analysis. Additionally, value chain analysis by porter than well as marketing mix are conducted to analyse the company's resources and capabilities. Furthermore, the company undergoes regular evaluation of its various strengths, weakness, opportunities as well as its threats. There are several formats to business conducted under the name of the company Tesco are tech support, telecom, bank, petrol stations, club-card, home shopping along with the dark store, one stop, metro, express, superstores and Tesco Extra.
Task 3 Using value chain method for describing internal environment of Tesco
Porter's value chain analysis for Tesco
The value chain analysis according to the Porters is the strategic evaluation tool which links the organizations secondary activities with the primary activities. For the identification of strengths and weakness of the several processes of the company value chain is analysed. Moreover, this analysis also helps in to reveal the impact it creates on the costs and profits. Thus, the two activities of the company primary and secondary can be described as
In the value chain of the organization Tesco, inbound plays an very effective role. In order to bargain low cost to suppliers, the company Tesco uses economics of scope as well as brand image with the leading position. Therefore, the company Tesco assures delivering of right product, right place at right time. Thus, storing of the product, scheduling staff, selection of product are the various inbound logistic activities which the company Tesco uses in order to maintain competitive advantages (Gaganis, Pasiouras and Voulgari, 2019).
The Tesco digital program is the IT system which the company uses as the strategy in order to develop strategy of low cost in an efficient manner. There fore, in order to reduce in stock holding as well as to gain high profits the company uses the third generation ERP solutions in order to manage various operations of the company.
For gaining and maintaining strong position of brand in the both offline and online segment the company Tesco uses its outbound logistics in a most efficient manner. Metro, Expresses, Home plus and Superstores are the various format which the organization uses in order to reach its huge customer base.
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Marketing and sales
For boosting consumers demands, the organization Tesco uses the campaigning which ensures providing the lowest price of the product to the customers at the lowest price along with the highest possible quality. Moreover, the company gained its huge customer base from the schemes of effective loyalty programs by using it clubs card. Thus, enhancement of positions in market as a competitive retailer is been help provided to Tesco through such strategies (Varzandeh, Farahbod and Zhu, 2016).
In order to reach top positions in the market the company has implemented the dual strategy in an most efficient manners i.e. cost leadership as well as efficient customer services through differentiations. More over, Tesco being the first company of United Kingdom to introduce online store for products such as electronics, cloths etc. to save consumers time.
Collection of order from the nearby store by the customer itself is the strategy introduced by the organization Tesco through expansion of its stores as warehouses of the products. Moreover, the company has applied the strategy of single vehicle system as well as warehouse implementations in order to save their cost and time in its operations (Cai, Cui and Jo, 2016).
Human resource management
For recruiting new employees as well as to retain talented employees the company Tesco uses various technique such as rewarding, personal developing programs as well as effective trainings provided to its workers.
Competitive advantage of the company Tesco is been enhanced by the online systems. Furthermore, in order to provide the customer with the improved product and services the company tends to adopt several advance technology and latest innovative approaches.
A huge amount is spent by the company on procurements of services and goods. Through internal analysis, the company evaluates the core capabilities as marketing mix efficiency through involvement of 4P's, club card loyalty schemes, price champaign depending on market and sale, efficient customer service, hiring excellent and talented workers as well as showing effectiveness in several organizational operations (Głodowska, 2017).
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Task 4 Reflection of value chain model
Through value chain model by Porter, I had understood that value chain analysis is used by Tesco and several other organization as a strategic evaluation tool which helps in linking the primary or core activities of the organization with the secondary or the supporting activities. Through this analysis I had learned that identification of weaknesses and strength of the organization has added value to the several processes of the company. The primary or the core activities helped the company to focus on consumers along with the revealing of the consequences which makes costs and profits. Through the model of value chain by porter, the primary activities consists of services, marketing and sales, outbound logistics, operations as well as inbound logistics. While the secondary or the support includes procurement, technology developments, human resource management as well as firm infrastructures. Therefore, the primary activities in the porter's value chain model are considered to be the basic for providing the competitive advantages while the secondary or the support activities are considered to be the assistance to the primary activities. Additionally, I had understood that, for example in manufacturing organization, the system is consists of inputs, processes and outputs. While several other consumptions and acquisition of resources are required such as management, administrations, land, building, equipment, material, labour and money which serve as the secondary or support activities of the firm which affects the profitability as well as the cost in the production of services and products in the company (Giannakis and Papadopoulos, 2016).
Additionally, I had understood that for the conversion of inputs into outputs, there are several activities which are carried by the company in order to obtain the desired product. And these activities are classified into two basis categories primary and supportive according to the porter value chain model 1985. Thus, lastly I had understood that companies competitive advantage does not only depends upon the profits it generates rather it depends upon the value it generates for its competitors too (Gaganis, Pasiouras and Voulgari, 2019).
This report can be concluded as, one of the important aspect of any organization is called business environment. External institutions, investors, economic conditions, consumers, government, media, competitors as well as suppliers are the various forces which contributes in the business environment of any business. More over, a business is greatly influenced by the total sum of internal and external factors of the organization. Additional, in this report it had been discussed the value chain model which has been proposed by the researcher Porter in 1985, followed by the description of the company Tesco as well as implementation of value chain model of porter 1985 on the company Tesco. Furthermore, this report had been consisting of reflection of the value chain model of Porter (Hillson and Murray-Webster, 2017).
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