RIMS INTERNATIONAL SCHOOL OF BUSINESS & TECHNOLOGY

A PROJECT ON: ASIAN PAINTS VALUE CHAIN, BUSINESS PROCESS

SUBJECT NAME: MANAGING BUSINESS ACTIVITIES TO ACHIEVE RESULTS

PRESENTED BY KEYUR.P.DESAI

BBA FIRST YEAR HIGHER NATIONAL DIPLOMA

PROJECT GUIDE Prof. Mrs PRIYA CHOWDHURY

DATE OF SUBMISSION: 9/9/11

RISBT MUMBAI INDIA

KEYUR DESAI

Page 1

Q.1 Research on value chain analysis, analyse in detail and how business manage using value chain analysis? Ans Value chain analysis is the method of assessing strengths and weakness that divides a business into a number of linked activities, each of which may produce value for the customer, Michael E. Porter, Competitive Advantage: creating and sustaining superior performance, chap.2 New York: the free Press, 1985. The value chain is a framework for analyzing the contribution of individual activities in a business to the overall level of customer value the firm produce and ultimately to its financial performance. Another definition of value chain is that a high- level model of how business receives raw materials as input, add value to the raw materials through various processes, and sell finished products to customers. Value chain analysis is a powerful tool for managers to identify the key activities within the firm which form the value chain for that organisation, and have the potential of a sustainable competitive advantage for a company. Therein, competitive advantage of an organisation lies in its ability to perform crucial activities along the value chain better than its competitors. The value chain framework of Porter (1990) is an interdependent system or network of activities, connected by linkages (p. 41). When the system is managed carefully, the linkages can be a vital source of competitive advantage (Pathania-Jain, 2001). The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links the value of the organisations activities with its main functional parts. Then the assessment of the contribution of each part in the overall added value of the business is made (Lynch, 2003). In order to conduct the value chain analysis, the company is split into primary and support activities (Figure 1). Primary activities are those that are related with production, while support activities are those that provide the background necessary for the effectiveness and efficiency of the firm, such as human resource management. The primary and secondary activities of the firm are discussed in detail below. Primary Activities The primary activities (Porter, 1985) of the company include the following:

RISBT MUMBAI INDIA

KEYUR DESAI

Page 2

Inbound logistics: - These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm.

Operations: - These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc.

Outbound logistics: - These are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel.

Marketing and sales: - This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firms products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products.

Service: - There is often a need to provide services like pre-installation or after-sales service before or after the sale of the product or service.

Support Activities The support activities of a company include the following:

Procurement: - This function is responsible for purchasing the materials that are necessary for the companys operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices.

Human Resource Management: - This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage.

Technology Development: - This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive.

RISBT MUMBAI INDIA

KEYUR DESAI

Page 3

Firm Infrastructure: - This includes planning and control systems, such as finance, accounting, and corporate strategy etc. (Lynch, 2003).

Below is the diagram of value chain analysis which represents the primary and support activities in order to assess the firm internally.

Porter used the word margin for the difference between the total value and the cost of performing the value activities (Figure 1). Here, value is referred to as the price that the customer is willing to pay for a certain offering (Macmillan et al, 2000). Other scholars have used the word added value instead of margin in order to describe the same (Lynch, 2003). The analysis entails a thorough examination of how each part might contribute towards added value in the company and how this may differ from the competition. Note that in a company with more than one product area, it is appropriate to conduct the value chain analysis at the product group level, and not at the corporate strategy level. It is crucial for companies to have the ability to control and make most of their capabilities. In the advent of outsourcing, progressive companies are increasingly making their value chains more elastic and their organisations inherently more flexible (Gottfredson et al, 2005). The important question is to see how the companies are sourcing every activity in the value chain. A systematic analysis of the value chain can facilitate effective outsourcing decisions. Therefore, it is important to have an in-depth understanding of the companys strengths and weaknesses in each activity in terms of cost and differentiation factors.
RISBT MUMBAI INDIA KEYUR DESAI Page 4

Now the author will take into consideration the company which he has chosen i.e. Asian Paints ltd. The author will first take into consideration the primary activities of the value chain analysis of Asian Paints. The Author will explain one by one the primary activities of Asian Paints in detail.

CRITICAL ANALYSIS: 1. Inbound logistics: - These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. Asian Paints over the years have a good relationship with their suppliers and have long term contracts with their raw materials. Personnels are employed at all the head branches over the globe for overseeing the smooth transit of the raw materials i.e. pigments. With the SAP*CRM technology driven in the firm all the transactions are process through SAP with utmost transparency and monitoring the logistics. Lastly there are efficient storage facilities where the raw materials are easily stored and retrieved in all the manufacturing units around the world. 2. Operations: - This activity is related to the production of the products or services. Asian Paints has enrolled automated manufacturing process in each of units which has helped them to increase efficiency of the plants layout as
RISBT MUMBAI INDIA KEYUR DESAI Page 5

well as the work flow of all the departments for e.g. there is one unit Dispersion unit where pigments are mixed with the binder and suitable additives and are wetted with suitable dispersing agents then followed by Adjustment and then followed by packaging. The adoptions of Japanese techniques Kaizen and JIT have got the hold of production control systems which has helped them to reduce the cost and as well as continuous improvement in their working. 3. Outbound Logistics: - Stockyards, all across the country. Long term contracts with carters higher volume of business to transporters ensures competitive price. Regional Sales Office and Vehicle Dispatch Section linked through SAP, Efficient security system for prevention of any kind of theft. 4. Marketing and sales: - presence in PAN India and as well as global footprint has helped them to increase sales. The ongoing mission of getting new decorative paints as well as industrial Paints and chemicals have earned them the position which they wanted i.e. No 1 in the Paints & chemicals industry. Helping to augment the scarce resources like SCIB paints selling their paints through Asian paints dealership, in return Asian has access to SCIBs technology and unutilized capacity. Q.3) for your listed organisation define the various process used? ASIAN PAINTS LTD business process Model

RISBT MUMBAI INDIA

KEYUR DESAI

Page 6

RISBT MUMBAI INDIA

KEYUR DESAI

Page 7