Importance of Business Environment in Value Chain Management

The assignment emphasizes the significance of understanding internal and external factors that affect value chain management. It highlights the role of cultural differences, social bonding, and political regulations in improving business relationships and achieving success in value chain management. The summary also mentions how analyzing internal factors can help companies identify strengths and weaknesses to make improvements in their inbound and outbound logistics activities.

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Essay
Value Chain Management (VCM) is a strategic business analysis tool used for the
seamless integration and collaboration of value chain components and resources. Further, value
chain management services can make sure that company integrates tax consideration into
business process and changes to improve the operational process. There are some benefits of
supply chain management such as it is closely related to the faster delivery time and it is the
ability to optimise inventory level. The further manufacturer can make strong relationship with
wholesaler and retailers through delivering their order on time. For manufacturer it is essential to
build supplier’s trust. Through adding an effective value chain management system to a business,
it leads to add global efficiency and can lead to lower cost or raw material. Effective supply
chain management assists in meeting the needs and wants of the customer in an effective
manner. To understand the business environment in which firm operates its activities is esential
accomplishing success. At the time when an organisation interacts with is environment defines
its future (Too, Le and Yap, 2017). In value chain management, there are different sets of
activities that are inbound logistics, operations, outbound logistics, marketing sales etc. are all
primary activities.
There are some requirements for successful value chain management that are to conduct
research and development. In this, it is important for the company to understand the needs and
wants of customers so that products can be made accordingly. Therefore, through careful market
analysis, includes the measurement of consumer trends and firm can anticipate with those
products available (Goetsch and Davis, 2014). Further, at the time of manufacturing the product,
it has a significant impact on quality, value and cost. While carrying out all the activities for
manufacturing and delivering a product, it is important to ensure quality, time and cost. Further,
environmental uncertainties also lead to create issues in the product chain. Such as unexpected
changes in the supplier competitor, technology, and customer need and wants. Due to increase in
the environmental uncertainty is an factor in the realisation of strategic value chain management
plans. Apart from this, environment of the firm is related to the company expectation, quality and
delivery of product on time and competition in the sector (Lewis, Passmore and Cantore, 2016).
Uncertainty leads to affect the performance of the company, therefore, it is important for the firm
to understand the business environment and work accordingly in order to perform in a proficient
manner. There are various business environment factors that can help the company for successful
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value chain. In a business environment, it includes macro and micro facto which help in the
company in understanding the improvement in its business activities. Through gathering
information related to the political, economic and legal factors, company can manage changes in
its value chain management.
For instance, there are many new technologies introduced in the market which help the
company in carrying out all its supply chain activities. With the use of advanced technology, it
becomes easy for the firm to manufacture products in less time and deliver them to the customer
on time (Kagermann, 2015). New technology has lead to improve quality, reduce cost and time
which are considered in the value chain management. Furthermore, telecommunication permits
all the actor in the supply chain to effectively communicate with each other. With the use of
information technology, it permits distributors, suppliers, retailers, manufactures and customer to
minimise the time and unimportant activity. It can also be stated that manager can experience
considerable benefit with use all this flow of information and easily improved customer and
supplier’s relationship. The supply chain is mostly dependent on its technology and it plays
significant role. It is an effective tool in building and increasing buyer and seller relationship
(Bradley, 2016). Therefore, it can be stated that technological aspect is one of the key factors in
the business environment and it has attracted a lot of attention in a value chain management.
Apart from this, there are various social factors which company can consider while
manufacturing products and services. It is essential for the firm to understand the changes in
needs and wants of the customer and modify its value chain activities so that satisfaction level of
the customer can be increased (Cameron and Green, 2015). Cultural difference is related to the
way firm behave in the value chain. As it leads to create difficulty in managing the supply chain
globally. The cultural difference is one of the significant factors in an internal organisational
relationship and it can also influence the manner of coordination and trust development (Doppelt,
2017). Therefore, the company should focus on cultural factors for successful value chain
management. Through focusing on the business environment, company can make improvements
in its value chain management. Apart from this, firm need to undertake social factor within for
operations as because different firm culture and relationship may be the difference. As social
bonding is one of the important factors which shows small supplier commitment to the wholesale
buyer (Kerzner and Kerzner, 2017). The business polices all lead to impact the firm operation
(Goetsch and Davis, 2014). The political environment in one country may be different from other
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nation. Therefore, the company should have clear understanding related to the rules for carrying
out value chain activities. As regulation lead to push the forms for improving business
relationship for the success of value chain management. Through analysing internal factor,
company can understand its strength and weakness which help them in making improvement in
its value chain management. The company gets various opportunities with the use of which it can
focus on improving its inbound and outbound logistics activities. It is concluded that if company
focus on its business environment factor, then it can easily make improvement in its value chain
management which help in accomplishing the success.
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Reference
Books and Journals
Bradley, G., 2016. Benefit Realisation Management: A practical guide to achieving benefits
through change. CRC Press.
Cameron, E. and Green, M., 2015. Making sense of change management: A complete guide to
the models, tools and techniques of organizational change. Kogan Page Publishers.
Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Goetsch, D. L. and Davis, S. B., 2014. Quality management for organizational excellence.
Upper Saddle River, NJ: pearson.
Kagermann, H., 2015. Change through digitization—Value creation in the age of Industry 4.0.
In Management of permanent change (pp. 23-45). Springer Gabler, Wiesbaden.
Kerzner, H. and Kerzner, H. R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Lewis, S., Passmore, J. and Cantore, S., 2016. Appreciative inquiry for change management:
Using AI to facilitate organizational development. Kogan Page Publishers.
Too, E., Le, T. and Yap, W., 2017. Front-end planning-The role of project governance and its
impact on scope change management. International Journal of Technology. 8(6). pp.1124-
1133.
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