Value Chain Assignment | Online Essay Help

Presentation
Part III – Firm or Internal Environment
• Introduction to the Value Chain Analysis
Primary Value Chin Activities
• Supply Chain Management
• Operations
• Distribution
• Marketing and Sales
• Customer Service
Secondary Value Chain Activities
• Human Resources Management
• R&D / New Product Development
• Corporate Leadership
Summary
Important Reminder

PRESENTATION

The cover page should include:
• the first and last name of each student
• the student number of each student
• the e-mail address of each student
• the identification name of the firm being analyzed

The assignment will be about ROUGHLY 12 to 20 pages, double spaced.

FIRM OR INTERNAL ENVIRONMENT

Please refer to textbook and lecture notes on factors that can be considered and discussed in each value chain function.

Include the following:
• obtain the last 3 years of financial statements for your firm AND the DIRECT competitors (those in the same Strategic Group). Important: If financial statements are not available for your firm, you should select another firm in your industry for which the financial statements are available
• NORMALIZE the data (i.e., convert each line item into a percentage of total revenues). Note: Excel will do this quickly
• You should provide two Appendices: 1. Normalized Balance Sheet for your firm and direct competitors for each of last 3 years; 2. Normalized Income and Expense Statement for your firm AND the direct competitors for each of last 3 years
• compare the data for EACH of the last 3 years for your firm and the direct competitors to determine the trend line for EACH category (e.g., the cost of goods sold the same as a percentage over the 3 years or is it increasing or decreasing and why? Are labor costs stable as a percentage relative to competitors? Is cash on hand growing as a percentage of total assets on the balance sheet?)
• In other words, complete a normalized financial statement trend analysis for EACH of the past 3 years, and provide a comparison WITH EQUIVALENT METRICS for 2 or 3 direct competitors for EACH of the past 3 years (i.e., percentages and ratios) to determine which firm is ahead ie a strength and which firm possesses a weakness in each VC activity. This thus provides ratio metrics for EACH value chain value activity, and include equivalent metrics for EACH of the 2 or 3 direct competitors
• analyze the ratio metrics in each value chain activity to determine if it is a strength or a weakness (i.e., Is your firm underperforming or performing better than the competitors, based on the ratios provided?)
• evaluate EACH value chain function using Hitt’s typology (i.e., rare, non-substitutable, inimitable, costly) to determine the contribution of each value chain activity to the Sustainable Competitive Advantage
• identify which value chain activities account for the change in financial performance and explain why
• identify the firm’s sustainable competitive advantage, if any

Important:

You WILL be penalized if you complete the financial statement analysis as a separate section OUTSIDE of the value chain analysis.

You should use the financial ratios in most sections of the Value Chain Analysis to demonstrate the application of normalized comparative data to value creation analysis

It is not strategic to simply perform a financial statement analysis without attempting to determine which financial metrics are appropriate or relevant for each value chain activity. This is because financial statement analysis is merely another aspect of value chain analysis. The value chain IS the firm, broken down into smaller activities that are instantly recognizable to bankers, consultants and managers.

Financial statements information IS another representation or manifestation of the firm. Financial statements capture financial consequences of management decisions concerning the various value creating activities and, thereby, provide metrics that can be compared to industry averages OR a leading competitor in your firm’s industry or industry segment.

These requirements force each of you to think about and analyze the relationship of the financial statements and their meaning to the value creating activities and the management decisions concerning those value creating activities; that which we call the functions and functional courses (e.g., marketing, finance, accounting).

Decide which financial numbers produce meaningful and/or illuminating metrics to evaluate each specific value creating activity.

Not all financial numbers can be attributed to a specific value creating activity, as the particular financial ratio or trend may “cut across” several value creating activities. In that case, “Firm infrastructure” (renamed “Corporate HQ/Leadership”) is the residual area where you discuss the numbers and trends that cut across all value creating activities. This “Corporate HQ/Leadership” is the management executive team, or the corporate head office, that manages the corporation. The analysis of firm infrastructure is the longest section of this assignment.

By comparing these metrics to the same industry metrics, you will then be able to evaluate which parts are not functioning well and which parts are functioning strongly.

In this assignment, after looking at the parts of the firm, you can use various “strategies” to fix the problems you discovered.

INTRODUCTION TO THE VALUE CHAIN ANALYSIS

In this section, please provide:
• a brief history of the firm
• the year the firm was founded
• the location where the firm was founded
• the type of core business the firm was involved in when founded
• the names of the key entrepreneurs who founded the firm
• the firm’s current:
o annual revenues
o net income
o number of employees
o percentage of market share in the industry
o regions in which the firm is doing business

PRIMARY VALUE CHAIN ACTIVITIES

SUPPLY CHAIN MANAGEMENT (Porter’s Inbound Logistics and Procurement)
About 1 page, double spaced (length customized for company such that if this section is very relevant more may be written).

In this section, you may consider such factors as the following:
• provide metrics that measure the efficiency of your firm’s supply chain management (e.g., average days of inventory);
• discuss relationships with suppliers (e.g., partnerships, ownership of key supplier);
• discuss key inputs used (e.g., quality or purchased in bulk which helps decrease costs for focal firm or a direct competitor);
• use metrics to identify strengths and weaknesses for this value chain function.

OPERATIONS
About 2-5 page, double spaced (important for any company).

Operations is the CORE activity of ANY firm where employees create, make or sell the firm’s products or services. The retail branches, or stores, of a retailer or a bank or KPMG = Operations.

The classroom in a university is “operations” as that is where education and learning occurs

The stores in Walmart or any retail chain are operations.

In this section, you can consider factors such as:
• identify the number of stores, outlets or factories, for EACH of last 3 years for your firm and its direct competitors;
• identify the firm’s regional locations;
• same store sales for EACH of last 3 years (annual revenues / number of stores or outlets) and compare the same metrics to your direct competitors (if available);
• sales per square foot for EACH of last 3 years for your firm and your direct competitors (if metrics are available in financial statements);
• identify other metrics, such as the sales per employee and the sales per store;
• discuss operations how the firm and/or direct competitior(s) provide services/products compared to competitors that may be a strength (e.g., characteristics of the product or services. Does the firm provide complementary services with their services such as for instance Indigo has Starbucks in their stores).
• use metrics and discussion to identify strengths and weaknesses in this value chain function.

DISTRIBUTION (Porter’s Outbound Logistics)
About 1 page, double spaced (length customized for company such that if this section is very relevant more may be written).

In this section, you may consider (if applicable to your firm and certain metrics are available in the financial statments) such factors as the following:
• identify outsourcing for your firm:
o to whom
o how
o where
• identify metrics to determine efficiency of this value creating function
• provide the number of distribution centres
• provide the number of square feet of EACH distribution centre
• use metrics to identify the strengths and weaknesses for this value chain function

MARKETING AND SALES
About 2-5 pages, double spaced (length customized for company such that if this section is very relevant more may be written. Hint – Section relevant for most companies).

In this section you can consider the following:
• identify and analyze the firm’s (if available):
o market share
o revenues and marketing expense
o sales trends
• identify the firm’s advertising strategies (i.e., Which media are used?
• identify any financial or market metrics and/or discuss factors that illuminate the marketing or sales trends growth or declines, and explain why. For instance, compute the marketing expense as a percentage of sales for EACH of the last 3 years and compare the expenses to competitors if available (if available);
• If applicable to your firm, provide analysis of the 4Ps compared to direct competitors (e.g., place, product, price, and promotion). Provide a qualitative discussion. If possible, provide a few metrics. For instance, what is the revenue per type of product or sales channel (e.g., e-commerce versus bricks and mortar store). What is the revenue per location (e.g., province) etc….
• use metrics and discussion to identify strengths and weaknesses for this value chain function

CUSTOMER SERVICE (Porter’s Service)
About 1 page, double spaced. (Length customized for company such that if this section is very relevant more may be written).

In this section:
• explain how the firm services its customers after the sale (e.g., warranties, return policies, upgrade policies [for software firms]);
• identify after-sales service, including 1-800 numbers, website, etc.
• identify some metrics that indicate successful customer service (e.g., industry awards, ratings from JD Power) (if possible);
• use metrics to identify strengths and weaknesses for this value chain function

SECONDARY VALUE CREATING ACTIVITIES

HUMAN RESOURCES MANAGMENT
About 1 page, double spaced. (Length customized for company such that if this section is very relevant more may be written).

In this section, you can consider such factors as:
• identify the number of employees for EACH of the past 3 years for your firm and its direct competitors
• ensure part time employees are normalized to Full Time Equivalent (FTE) – divide all part time employees by 2 and then asdd to full time employees
• identify the revenues per employee for EACH of the last 3 years
• discuss the level of education or training of the firm’s employees (if important such as a knowledge based industry such as accounting firm);
• identify the employee salaries and compensation as a percentage of total revenues (if available);
• discuss potential issues with the employee turnover;
• identify any of the firm’s awards, such as the Fortune 100 list of best employers;
• discuss any key points regarding compensation, benefits, training that may provide your firm or a direct competitor with a strength;
• use metrics and discussion to identify the strengths and weaknesses for this value chain function

R&D / NEW PRODUCT DEVELOPMENT (Porter’s Technology Development)
About 1 page, double spaced. (Length customized for company such that if this section is very relevant more may be written).

IF your firm IS a technology, pharma or manufacturing firm, you can consider such factors as:
• computing R&D as a percentage of sales for EACH of the last 3 years;
• discuss any patents filed by the firm (if information is available);
• using metrics to identify the strengths and weaknesses of this value chain function

IF your firm IS NOT a technology, pharma or manufacturing firm, you may consider the following:
• discuss and/or identify the number and frequency of new product introductions to market (e.g., brewery, consumer goods, retailing)
• identify the strengths and weaknesses of this value chain function

CORPORATE LEADERSHIP (Porter’s Firm Infrastructure)
About 2-3 pages, double spaced. (Length customized for company such that if this section is very relevant more may be written).

Note: This is a very critical value creating function called Leadership or Management.

In this section, you may consider the following:
• identify the number of years of EACH executive (compared to direct competitors) and compute an average (compared to direct competitors) (if available on the firms’ internet sites for instance):
o within the firm
o within the industry
o in business more generally
Note: Please do not provide pictures or biographies or CVs of executives
• provide major metrics for EACH of the past 3 years for your firm its major direct competitors (e.g., revenue growth)
• analyze the share price for EACH of the past 3 years
• provide market capitalization for EACH of the last 3 years for your firm and direct competitors; is the market cap growing or decreasing and why (e.g., price to sales ratio)
• discuss any key happenings with top management such as the CEO (e.g., examine business media articles on your firm)
• use metrics and discussion to identify strengths and weaknesses in this value chain function

SUMMARY

In this section:
• provide a conclusion to your firm’s value chain analysis
• identify the most important value chain activities (not all activities are equally important)
• identify IF the firm has a Sustainable Competitive Advantage
• determine if the firm is overall:
o extremely attractive
o relatively attractive
o moderately attractive
o moderately unattractive
o extremely unattractive

Courses to Review
• Financial Accounting courses
• Managerial Accounting courses
• Corporate Finance courses