Bkal 3063 - Integrated Case Study

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QUESTION 2(a)

Porter’s Value Chain concept is one of the most valued concept today’s market. It is because it informs us how we can differentiate our product and services by analysing the chain of events that occur in our company. Generally, a value chain is a set of activities in a high- level that used to portray the procedure by which business receive raw materials, add value to the raw materials through various of process to create a finished product and services then administrations at that end product to customers. From these definition, we can says that the more value an organisation create, the more profitable it is likely to be same like when we provide more value to our customer, at the same time we build the competitive advantage of our company. There are two type of activities involved in this analysis which are primary activities and support activities. The primary activities are related directly to the physical creation, sale, maintenance and support of a product or services. These activities consist of five areas which were inbound logistics, operations, outbound logistics, marketing and sales followed by services.

The first area of these primary activities is inbound activities. Inbound activities is actually are all the processes related to receiving, storing and distributing internally. For this point, our supplier relationships are a key factor in creating value. For example in this case study mention that to mitigate the risk of high liquid prices, Costo Pavers buy their input of production from more than one supplier, then they will compare the price from several suppliers with the government contract price as a measuring stick to minimize the cost. The company also use natural gas which cheaper and cleaner and offers a constant supply as it comes from a pipeline. Therefore, in order to bit with their competitors, Costo Pavers can make good relationship with their supplier like be able to pay on time and make their job easier such as give the supplier sufficient time and communicate our needs on ongoing basis.

Next, the second primary activities is operations which means the transportation activities that change input into outputs that are sold to customers. The main important for this area is our operational systems in order to create value. For example, Costo Pavers change from oil to natural gas which is safer and more efficient production of asphalt which it create value added to the production and also be able to minimize cost of company. We suggest that, in this area Costo Pavers also can apply product and services differentiation which means a market strategy that business use to distinguish a product and services offering on the market.

In other word, the company need to have a good maintenance so it will improve the efficiency of machine to produce a good quality of materials and also maintenance of truck to perform the construction of paving. By applying these, the company is able to create value among potential customer that focus on cost value of product with other similar product in the market. The company also is able to create brand loyalty by deliver quality and value to customer continuously.

Besides, the third area of primary activities is outbound logistic. These activities is related to delivery our product or service to our customer. These are things like collection, storage, and distribution systems, and they may be internal or external to our company. In our opinion, the way to perform this area better than our rivals is by perform final inspection so that the road that constructed is ready and adequate to be used. For example, the Costo Pavers needs to appoint a person who in charge to check the construction site after the finish work is done by the employees to ensure they follow the standard requirement made by the client or customer.

In addition, the next area is marketing and sales activities. It is the processes that the company use to persuade customer or client from us instead of our competitors. It can be created by how well the way we communicate the benefit that we offer and that is sources of value. In order to compete with others competitor, we suggest that Costo Pavers to implement their marketing strategic. Such as manage the advertisement through billboard. From this way, company be able to have a guaranteed audience, as our message gets repeated views, it become more embedded in their memory. The company also can handle the consultation and briefing for client or government acknowledgement in their business operation. Then, company can implement awareness campaign as strategy of company to create a branding in the industry.

The last area of primary activities is services that means the activities related to maintaining the value of our product or services to our customer once it is been purchased. According to the case study given, states that Costo Pavers is anxiety with the impact of asphalt production to the environment. Furthermore, the company action in changing from oil to natural gas which is safer and more efficient production of asphalt which creates value added to the production. The other ways that we suggest to the company is by giving a good service by finishing the project on time, but still maintain the quality of their product. So, the company must ensure that their workers are able to perform their duties well and effectively so that a good result can be produced.

The second type of activities that contain in the Porter Value Chain is support activities. These activities support the primary function above. There are four area that include in this activities such as procurement or purchasing. This is related of what the organisation does to get the resources it needs to operate. This is including of finding the vendors and negotiating best prices. From this case study, we can conclude that the company try to find the best and cheapest price rather than rely solely on one supplier in order to to negotiate costs of liquid asphalt. When we relate with the inbound logistic in primary activity which we suggest to Costo Pavers create good relationship with the suppliers, we know that for these way, the company are able to get the best quotation price for their raw material in production.

Next, the other area of support activity is human resources management. This is the tools that how well a company recruits, train, hires, motivates, rewards and retains their workers. People are a significant source of value, so the businesses can create a clear advantage with good human resource practices. In this case study mentions that the company was laid off most of the paving employees at the end of