Assignment On: Value Chain Analysis of

Download as pdf or txt
Download as pdf or txt
You are on page 1of 11

Assignment

On
Task 1: Value Chain Analysis of Beximco Pharmaceutical
Limited

Submitted to

Ahmed Bin Yamin


Lecturer

Submitted by

Asif Imtiaz
Id: 19301014

Date of Submission:25/08/2021
Introduction
By conducting the Value Chain Analysis of Beximco Pharmaceuticals Limited during the
planning process, possible sources of competitive advantage can be identified. The
firm/company is a collection of different activities that share relatedness to some extent.
Beximco Pharmaceuticals Limited cannot trade all activities in the external market. The
Value Chain approach suggests that a company can consider these activities as
economic rent sources. These activities can also act as barriers to new entrants or
cause cost disadvantages to competitors.

Research Context
Beximco Pharmaceuticals Limited can identify various internal and external linkages
among activities through the value chain lens. The internal linkages are-
interrelationships between activities within same organisational units and external
linkages are between business units of same or different firms. Studying these
interrelationships can help a company take benefit from coordination and joint
optimisation.

Improved flow of materials, information and finances


The use of Value Chain Analysis can optimise the finances, products and information
flow.

● The improved information flow can help the company identify and exploit new
opportunities and reduce external threats. The continuous Value Chain evaluation
can result in timely filing important gaps that may affect a firm's productivity.
● The effective implementation of the Value Chain Analysis of Beximco
Pharmaceuticals Limited can improve the material and product flow due to
improved demand and sales forecasting. The inventory management also
improves as Beximco Pharmaceuticals Limited can minimise the delays by
tracking activities throughout the supply chain.
● Modern customers place high importance on quick response and convenient
access to important product related information. The unexpected interruption in
the information flow can affect the customer-supplier relationship. Beximco
Pharmaceuticals Limited Value Chain Analysis and its implementation can
highlight and remove the bottlenecks to the information flow

Formulate effective firm-specific strategies


Beximco Pharmaceuticals Limited Value Chain Analysis can be used in the competitive
strategic decision-making process. However, choosing the right competitive strategy
(cost leadership, differentiation or focus) requires knowledge of your own and rivals’ cost
structure.

1. Challenges associated with Value Chain Analysis of Beximco


Pharmaceuticals Limited

● The company may lose its vision and overall strategy by dividing operations into
different activities.
● Dividing the operations into primary and support activities may not be separable
due to increased complexity.
● The division process can be time consuming and finding the required information
can also be difficult.
● Effective value chain implementation does not only require familiarity but detailed
expertise.
● Beximco Pharmaceuticals Limited may find it difficult to get required information if
its Business Information System is not structured accordingly

➔ Porter’s Value Chain Analysis of Beximco


Pharmaceuticals Limited
Porter's value chain model is highly popular in the business world. However, Beximco
Pharmaceuticals Limited must not take it as a rigid, standalone framework by assigning
equal importance to all activities. The effective Value Chain Analysis requires Beximco
Pharmaceuticals Limited to realise that all activities or functions do not require the same
scrutiny level. Hence, the first step of adapting the Porter Value Chain framework is to
identify the importance of activities according to their role in the product/service delivery
process.

Here is the list of primary value chain activities as proposed by Porter:

● Primary Activities
The primary value chain activities of Beximco Pharmaceuticals Limited are directly
involved in producing and selling the product to targeted customers. Analysis of primary
value chain activities can improve the performance of Beximco Pharmaceuticals Limited
as explained below.

● Inbound Logistics

It is important to develop strong relationships with suppliers as their support is necessary


to receive, store and distribute the product. Without analysing the in-bound logistics,
Beximco Pharmaceuticals Limited can face various challenges in product development
phases. Analysis of in-bound logistics requires a company to focus on every aspect of
transformation from raw material to finished product. Some examples of inbound
logistics are retrieving raw material, storing the inputs and internally distributing the raw
material and components to start production.

● Operations
The importance of analysing operational activities rises when raw material arrives, and
Beximco Pharmaceuticals Limited is ready to process the raw material into the end
product and launch it in the market. Some examples of operational activities are
machining, packing, assembling and testing. Equipment repair and maintenance also
falls into this category.

It includes both- manufacturing and service operations. Analysis of operational activities


is important for improving productivity, maximising the efficiency and ensuring the
competitive success of Beximco Pharmaceuticals Limited. The increased productivity
can help Beximco Pharmaceuticals Limited to achieve consistent economic growth,
increase profitability and set a powerful basis for competitive advantage.

● Outbound Logistics
Outbound logistics include the activities that deliver the product to the customer by
passing through different intermediaries. Some outbound logistics activities are material
handling, warehousing, scheduling, order processing, transporting and delivering to the
destination. Beximco Pharmaceuticals Limited can analyse and optimise the outbound
logistics to explore competitive advantage sources and achieve its business growth
objectives.

Because, when outbound activities are timely managed with optimal costs and product
delivery processes put a minimum negative effect on the quality, it maximises the
customer satisfaction and increases growth opportunities for the firm. Beximco
Pharmaceuticals Limited should pay specific importance to its outbound value chain
activities when its offered products are perishable and require quick delivery to the end
customer.
● Marketing and Sales
At this stage, Beximco Pharmaceuticals Limited will highlight the benefits and
differentiation points of offered products to persuade the customers that its offering is
better than competitors. Only producing a high quality product at affordable costs and
distinctive features cannot create value until Beximco Pharmaceuticals Limited invests
on the marketing and sales activities. The sales agents and marketers play an important
role here.

● Services
The pre-sale and post-sale services offered by the Beximco Pharmaceuticals Limited will
play an important role in developing customer loyalty. The modern customers consider
post-sale services as important as marketing and promotional activities. The power of
negative e-WOM due to poor support service cannot be undermined in the current
technologically advanced era. The company must analyse its support activities to avoid
damaging brand reputation, and instead use it as a tool to spread positive word of mouth
due to quick, timely and efficient support services.

● Secondary Activities
The support activities play an important role in coordinating and facilitating the primary
value chain activities. Beximco Pharmaceuticals Limited can also benefit from analysis
of its support activities as explained below.

● Firm infrastructure
The firm infrastructure denotes a range of activities, such as- quality management, legal
matters handling, accounting, financing, planning and strategic management. Effective
infrastructure management can allow Beximco Pharmaceuticals Limited to optimise the
value of the whole value chain. Beximco Pharmaceuticals Limited can control the
infrastructure activities (or commonly called overhead costs) to strengthen the
competitive positioning in the market.

● Human resource management


Beximco Pharmaceuticals Limited can analyse human resource management by
evaluating different HR aspects, including- recruiting, selecting, training, rewarding,
performance management and other personnel management activities. The effective HR
management can allow Beximco Pharmaceuticals Limited to reduce competitive
pressure based on motivation, commitment and skills of its workforce. The company can
also achieve its cost minimisation objectives by analysing hiring and training costs with
their relative return. The heavy dependence of Beximco Pharmaceuticals Limited on
employees' talent will increase the importance of this value chain support activity.

● Technology development
In a modern, technological advanced era, almost all value chain activities depend on
technological support. The technological integration in production, distribution, marketing
and human resource activities requires Beximco Pharmaceuticals Limited to realise the
importance of technology development. It can be divided into product and process
technological development activities. Some examples are- automation software,
technology-supported customer service, product design research and data analytics.
The research and development department of Beximco Pharmaceuticals Limited is
classified in this category.

● Procurement
The procurement in the value chain denotes the processes involved in purchasing the
inputs that may range from equipment, machinery, raw material, supplies, raw material
and other items necessary for producing the finished product. Due to its linkage with
multiple value chain activities, Beximco Pharmaceuticals Limited should carefully
consider its procurement activities to optimise the inbound, operational and outbound
value chain.

2.Competitive Advantages through Value Chain Analysis of


Beximco Pharmaceuticals Limited
It is important for Beximco Pharmaceuticals Limited to base its competitive advantage on
activities in which it has access to the rare or scare resources. It may include- intellectual
capital, assets, skills or distribution network. The Value Chain Analysis can help Beximco
Pharmaceuticals Limited identify those activities and develop those areas to get a strong
competitive edge over rivals. There are many examples (like Toshiba and Sharp) that
consider Value Chain Analysis as a tool to get a competitive advantage and invest
heavily in research and development activities within their value chain network. Porter’s
generic strategies for achieving the competitive advantage and value chain model can
be used together to set a strong competitive advantage basis.

The analysis of the value chain activities can be done to understand the competitive
advantage sources. Beximco Pharmaceuticals Limited can either use the operations,
marketing and other relevant value chain activities to avail the cost advantages or it can
use the human resource, technology, infrastructure, service or other relevant activities to
set the strong differentiation basis. Broadly, the competitive advantage sources can be
grouped into two types- cost and differentiation. Beximco Pharmaceuticals Limited can
obtain a competitive advantage from one or both sources, depending on the depth and
breadth of its Value Chain Analysis. Next parts of the article present in detail how
Beximco Pharmaceuticals Limited can configure primary and/or secondary value chain
activities to achieve the desired cost and differentiation objectives.
3.Cost drivers of Beximco Pharmaceuticals Limited Value
Chain Analysis
Beximco Pharmaceuticals Limited can control following drivers to add value, set
differentiation basis and enhance efficiency.

● Organisational policies
● Integration
● Timing
● Economies of scale
● Linkages
● Interrelationships
● Capacity utilisation
● Learning and Spillover

However, it is important to note that costs can be reduced only to some extent. Beximco
Pharmaceuticals Limited Value Chain Analysis must also consider the customers’
perceived value that may justify the higher price charged by the company compared to
competitors.

4.Differentiation through primary value chain activities


Beximco Pharmaceuticals Limited can individually analyse the primary activities from all
aspects and create differentiation basis by identifying the following sources:

● Inbound logistics: possible differentiation basis for Beximco Pharmaceuticals


Limited are:
○ Procure high quality inputs to offer high quality finished product
○ Effective incoming input handling to reduce damage
● Operations: possible differentiation basis for Beximco Pharmaceuticals Limited
are:
○ Flexible manufacturing system
○ Wide product range
○ Improved product appearance
○ Prevention of product premature failure
○ Quick response to unique specifications
○ Improved customer satisfaction through lower defect rate
○ Improved product performance due to conformance to technical
specifications
● Outbound logistics: possible differentiation basis for Beximco Pharmaceuticals
Limited are:
○ Effective handling and better shipping to reduce product damage
○ Timely product delivery
○ Flexible delivery capabilities
○ Effective order processing procedure
● Marketing and sales: possible differentiation basis for Beximco Pharmaceuticals
Limited are:
○ Improved relationships with suppliers and customers
○ Enhanced communication with customers by offering high quality
information.
○ Brand awareness, reputation and image development due to extensive
and effective advertising.
○ Effective coordination among product, research and marketing
departments.
○ Wider sales force coverage.
● Services: possible differentiation basis for Beximco Pharmaceuticals Limited are:
○ Superior service quality
○ High quality technical assistance
○ Reliable and quick repair/maintenance service

4.1Differentiation through secondary value chain activities


Beximco Pharmaceuticals Limited can also analyse the secondary value chain activities
to set differentiation basis:

● Firm Infrastructure: Beximco Pharmaceuticals Limited can set differentiation basis


through:
○ Extensive database development for effective marketing
○ Advanced information system to get deeper customer insights.
● Human Resource Management- Beximco Pharmaceuticals Limited can set
differentiation basis through:
○ Attractive rewards to encourage creativity and maximise productivity
○ Personnel training for effective interaction and superior customer service
● Technological development- Beximco Pharmaceuticals Limited can set
differentiation basis through:
○ Quick new product development
○ Innovation integration in product designing
○ Innovative product features with patented technology
● Procurement- Beximco Pharmaceuticals Limited can set differentiation basis
through:
○ Reliable transportation to ensure quick delivery
○ Procure high quality raw material and replacement parts.

5.Value Chain Analysis Example


● Beximco Pharmaceuticals Limited can analyse value chain activities to reduce
the costs, find better deals with suppliers and offer high quality products at
affordable prices.
○ A relevant Value Chain Analysis Example is provided by Walmart that
continuously analyses its value chain activities to remain innovative,
minimise operational costs and offer low-cost yet reliable services.
● Beximco Pharmaceuticals Limited can analyse the support value chain activities
to offer superior customer support. It can also analyse the operational activities to
expand the presence in geographically dispersed areas.
○ It can be understood with the help of another Value Chain Analysis
Example. Starbucks places high importance to analysing value chain
activities and has successfully opened direct stores in more than 50
countries.
● Beximco Pharmaceuticals Limited can also use the Value Chain Analysis as a
tool to do backward integration. It can be done by merging or purchasing the
suppliers to ensure timely raw material availability.
○ Apple provides a relevant Value Chain Analysis Example in this regard.
The company is known for its efficient value chain and successfully
controls the product and parts.
● The Value Chain Analysis can also be done by Beximco Pharmaceuticals Limited
to maximise the operational efficiency, reduce waste and integrate sustainability
in business operations.
○ Intel is a good Value Chain Analysis Example that has reduced the waste
and negative impact on the environment by analysing its value chain
operational activities. The company has received appreciation for its waste
reduction efforts.
● Beximco Pharmaceuticals Limited can learn from the value chain practices of
Dow AgroSciences. Dow has used Value Chain Analysis to explore the unique
marketing opportunities and extracted value from the generic commodity market.
The company has also used Value Chain to manage the risks at different product
lifecycle phases.

The above-stated examples show how Beximco Pharmaceuticals Limited can benefit
from conducting a detailed Value Chain Analysis. However, it is also important to note
that the Porter Value Chain model application depends on the unique contextual
variables that must be considered when assigning the weightage to primary and
secondary value chain activities.

You might also like