Business Environment - Value Chain Model

Businesses
environment

Business Environment 1
Introduction
Business environment is the summary of all external and internal factors that influence a
business. There are several strategic management tools that assist the company to understand the
business environment. Value Chain Model is one of the strategic management frameworks that
help to estimate the internal and external environment (Ansoff et. al, 2018). The main aim of this
report is to understand the concept of Value Chain Model. In this report, a real life example is
also taken to determine the usefulness of value chain model. Woolworths has been taken into
consideration as a real life example in order to understand the Value chain model framework.
Value Chain Model
Value chain model is a process of review the organization. It is a strategic management
framework that helps to determine the internal and external resources. It defines the operating or
producing system of the company. The process of the company is made from the system and
structure that the company used to operates the business. It includes manufacturing system,
subsystem, transformation processes, inputs and outputs. This model defines the money,
materials, equipment, land, administration, buildings, labors, and managements. The value chain
activities also help to evaluate the costs and affects profits. The most of the firms engaged in
hundreds, even thousands of actions in the procedure of converting or producing the input into
output (Rothaermel, 2015). This framework classifies the company’s activities in two categories
such as Primary and Support activities. This framework is founded by Michael Porters in the
year 1985. The primary activities are inbound logistics, outbound logistics, operations, service,
marketing and sales. Secondary activities are procurements, technological development,
infrastructure and human resource management (Horng, Chang, and Chen, 2016).

Business Environment 2
These two categories and activities have been explained in depth and these are:
Primary Activities includes are:
Inbound Logistics- It defines the relationship with suppliers and it also contains all the activities
which contains store, receive and disseminate inputs.
Operations- It states the actions that are essential to transform inputs into outputs.
Outbound Logistics- It includes collect, stores and distributes the output activities of the
company.
Marketing and Sales- It describe the buying and selling the products and services by
influencing the consumers to buying the services.
Service- It contains all the actions after buying the products or services from any organization. It
contains the selling and delivery process so that the customer het get the services effectively and
enhance its brand value.
Secondary Activities contains:
Procurement- It is an acquisition process that contains raw material or resources for the
organization.
Human Resource Management- It contains all activities related to human resource
management such as developing, recruiting, compensating, hiring, training and (if necessary)
dismissing or laying off personnel.

Business Environment 3
Technological Development- It defines the software, hardware, equipment’s, processes and
technical knowledge which is related to the company’s transformation raw material into finished
goods.
Infrastructure- The Company serves the services to consumers due to which it is required to
contains the organization functions or departments together under a roof. The togetherness of the
functions and departments together in effective manner is called infrastructure. There are various
functions or departments in the organization such as finance, legal, quality assurance,
accounting, planning, public affairs, government relations and general management (Yanzheng,
Zengxiang, and Changhong, 2015).
Woolworths
Woolworths Group is a supermarket supply chain of Australian market that operates the business
in supermarket industry. It offers the consumer goods in Australian market such as and baby
supply, household pet products, selling groceries, beauty products and stationery items. The
organization works the business in different places of Australia like it has 100 of stores that
provide the consumers goods in which 19 of stores that are suitable and 976 are supermarkets.
The stores of Woolworths contain the similar logo and also relevant to the organization. The The
organization also establish the business in online market with the popular name “Home shop” in
order to bring the goods or services to wide range of area to serve the services to huge number of
customers (Woolsworth, 2018a).
The main vision of Woolworths is to maintain the relationship in order to generate the profit
which is the main motive of every company. The company attaches the customers with its
services that help to earn the long term profit and also increases the large numbers of customers