Value Chain Concept and its Application in Telstra Telecommunication Company

Management Accounting 1
Management Accounting
By [Name]
Name of the school/ Course
Professor’s Name
Name of the university
Name of the city
Date

Management Accounting 2
Executive summary
The report describes the Value Chain concept. It includes an explanation of how the idea is useful to the
development of the organization. Within the paper, Telstra, the largest telecommunication company in
Australia was used as the Case study. The competitive strategy for the company through the use of the
value chain model was carried out in the research. The paper also applied the different and various
concepts of Value chain to describe the standings of Telstra Telecommunication Company.

Management Accounting 3
Table of Contents
Executive summary..................................................................................................................................2
Question 1a: Description of the value chain............................................................................................4
Question 1bi: Chosen Company (Telstra)................................................................................................5
Question 1bii: The competitive advantage of Telstra..............................................................................6
Question 1biii: Value chain model for the company................................................................................7
Question 1biv: Value-adding processes...................................................................................................8
Question 1bv: Relevancy of Value Chain.................................................................................................8
Question 2...............................................................................................................................................9
(a)............................................................................................................................................................9
Allocation rates........................................................................................................................................9
(b)............................................................................................................................................................9
Job 20 overhead cost allocation in October.............................................................................................9
(C)............................................................................................................................................................9
Job 20 total cost......................................................................................................................................9
D. The amounts of fixed and variable overhead allocated to jobs in October.........................................9
Question three......................................................................................................................................10
Reference..............................................................................................................................................11

Management Accounting 4
Question 1a: Description of the value chain
The concept of value chain describes a range of activities that are needed to bring a service or product
through different levels of production. These include procurement of raw materials and other related
inputs. It also contains physical transformation, assembly, and acquisition of useful services, for
example, transport and cooling, and responding to the demands of consumers. Basing on the research
which was carried out by UNIDO (2009), the term value chain gives a full description of all the activities
which are value attached, and they are needed or undertaken in transforming the given product or
service from an early stage of input supply. This is usually done through several the processing stages,
stage of market destination, as well as the disposal stage after use. Michael porter explained the
different components of the value chain concept. These business activities were divided into two broad
activities, which were support and primary. Therefore, the value-chain concept, as explained by porter
consists of five primary events and four support activities. This means that increasing the efficiency of
one of the four support activities would be beneficial to at least one of five primary activities (Chang et
al. 2016). The different activities which are falling into these are described in the following manner:
Primary operations contain five components. All of these are very useful in adding value to service as
well as creating a competitive advantage. These activities are; Inbound logistics, which consists of
functions such as receiving, warehousing, as well as managing inventory. There are also operations
comprised of the different procedures which are very useful in turning the available raw materials to
finished product. There are also outbound logistics, which includes activities worthwhile in the
distribution of the final product to the consumer. There are also sales and marketing consisting of
strategies or activities necessary for enhancing visibility as well as targeting purposeful customers
(Munir, 2009). Some of the events in sales and marketing include promotions, advertisement, and
pricing. The other component of primary activities is the service which contains different programs that
are very useful in maintaining the product quality or service as well as enhancing the experience of
consumers, some of the activities in the service category are customer services, repair, service
maintenance, refund as well as exchange (Angel, 2012).
The other category of activities explained in the value-add concept is the support activities. Some of the
activities within this category are described in the following groups or manner. The significant role of the
support activities is making primary operations very effective and too efficient (Hansard, 2011). The
support activities are known as overhead costs on the income statement of the company, they are
explained as shown: Procurement, it tells the different measures which are undertaken by the company
in obtaining raw materials; technological development, this is very useful in carrying out research and
development in the firm, it consists of developing and designing different manufacturing techniques as
well as automating different processes in the firm; the other support activity is Human resources (HR)
management, this consists of retaining and hiring employees who have a potential of fulfilling the
strategies of the business and also help in the designing of the product, marketing as well as selling it;
The other support activity is the Infrastructure activity, it consists of different systems of the company as
well as the composition of the management team, it consists of methods like accounting, planning,
finance, as well as quality control (Wiengarten et al.,2016).
Therefore the primary purpose of the value chain concept is to describe the set of activities which are
undertaken in the production of the given service or good (Munir, 2009). These activities are the