Management Accounting

the company will be JB Hifi Ltd. Need to do Question1

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................1
a) Value chain concept and ways in which value chain benefits organisation............................1
b) Evaluation of organisation using value chain concept............................................................1
REFERENCES................................................................................................................................5

QUESTION 1
Company – JB Hifi Ltd
a) Value chain concept and ways in which value chain benefits organisation
Value chain refers to business model which describes full range of the activities required
for creating service or product. Companies producing goods, value chain will comprise of the
steps involving bring product from the conception to distributions and everything like procuring
materials, marketing activities and manufacturing functions (De Marchi, Di Maria and Gereffi,
2017). Company conducts value chain analysis evaluating detailed procedures involved at every
step of the business. Purpose of value chain is of increasing efficiency of production so that
company could deliver the maximum value for minimum cost. Value chain refers to step-by-step
model to transform products or service from ideas to reality. It helps in increasing business
efficiency so business could deliver most values for least possible costs. End goal of the value
chain is of creating competitive advantage for the company increasing the productivity keeping
the costs reasonable.
Ways in which value chain analysis helps organisations
Low Cost Advantage
Company could identify the profitable activities which are value creating and which are
not. Assessment of the value creating operations allows the organisation in establishing cost
drivers for each process. It allows then for the cost improvement strategies to implement while at
same time ensuring not to lower customer value. Organisations will be able to identify areas
having lower access cost to the raw materials, innovative process or distribution channels.
Identifying Core competencies and the Activities
Using VCA, organisation identifies the activities of value generation and cost drivers.
Reducing cost of the individual value chain activities or configuring value chain, organisations
are able to create cost advantage. A major benefit to the organisation is that value chain is
flexible strategic tool for monitoring and controlling the business, looking competitors and
respective places in value system of industry.
b) Evaluation of organisation using value chain concept
i. Mission and ojectives of the JB Hifi Ltd
Mission
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Company has mission of delivering lowest prices, most extensive range, convenient
locations, best brands and to provide genuine personal services from the specialist staff.
Objective
 To provide its customers with wide range of products at reasonable prices.
 To become the leading brand in term of technology and product innovation.
 To provide the employees with most suitable working conditions with healthy
environment.
 To built a image as the most trusted brand among the customers for its products.
ii Description of competitive strategy
Competitive strategy refers long term action plan of company that is directed towards
gain advantage over the rivals evaluating the strengths, weaknesses, opportunities and the threats
in industry. There are mainly 4 types competitive strategies which are cost leadership,
differentiation, cost focus and differentiation focus strategy (Salvi and Pahurkar, 2017).
JB Hifi Ltd is using cost leadership competitive strategy as it provides products and the
services over lower cost. The strategy is adopted to provide the customers products and services
at lower prices attaining economies of scale.
iii. Value chain model for JB Hifi Ltd
Figure 1 Porters value chain model
(Source: Value chain analysis, 2020)
Value chain model identifying the operations of company
Value adding processes
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Inbound Logistics
Materials are purchased directly from the suppliers using JIT approach. They are
delivered to factory compound by the suppliers.
Operations
The products are produced in the company using advanced technology tools and
techniques.
Outbound Logistics
Products are delivered to the distributors, who then distributes them to vendors in
different regions and from them to retailers for end customers to purchase.
Marketing and sales
Products are promoted over various platforms like social media, television and published
materials. They are sold through both online and offline mode.
Services
It has feedback service and it provides free service for first 6 months (Curry, 2016).
Support Departments
Firm Infrastructure
It ensures that all financial, management and the legal system has in the place for making
business decisions and managing resources.
Human Resource Management
The HRM department provides the required staff and manages the employees of
company.
Technology Development
The department of company works continuously towards innovations and inventions in
technology for meeting the requirements of customers.
iv. Value adding processes of the company
Operations
The company has highly advanced technologies that helps in developing products with
advanced features that more effectively meets the demand of customer. It is has manufacturing
units located in different regions for procuring the goods at lower costs. The highly trained staff
design products that meet the customer specifications more accurately and actively that builds
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brand image and improves customer value leading to higher revenues increasing shareholder
value.
Marketing and Sales
The marketing and sales department in value chain model have critical role in helping the
organisation to meet its desired goals and objectives. Company markets its product over different
platforms such as print media, television and social media for promoting its product. Effective
marketing attracts customers from different regions and the specialised features builds image of
brand. Sales is another activity which is to performed effectively (Prasetyo and Dzaki, 2020). At
the door sales using online platform and free delivery service increases revenues for company
that helps in adding to shareholder's wealth. It also provides after sales service that builds a
connect of customer with company.
v. Relevance and usefulness of information on value chain
The value chain concept is useful for the business organisation as company is run by
performing number of activities related to designing, production, marketing, delivering and
supporting the product. The concept involves producing products in the manner that have greater
values than original costs to create the products. The value added is considered in form of profits
and which is indicated often as the margin. It enables the company to gain competitive advantage
performing important activities that are better or cheap than the competitors. The company aligns
the activities that creates value for the business. The information gathered above have explained
the relevance of value chain for organisation. For delivering high values to customers and
earning adequate profit margins value chain activities have to be performed efficiently.
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REFERENCES
Books and Journals
Curry, E., 2016. The big data value chain: definitions, concepts, and theoretical approaches.
In New horizons for a data-driven economy (pp. 29-37). Springer, Cham.
De Marchi, V., Di Maria, E. and Gereffi, G. eds., 2017. Local clusters in global value chains:
Linking actors and territories through manufacturing and innovation. Routledge.
Prasetyo, P. and Dzaki, F., 2020. Institutional performance and new product development value
chain for entrepreneurial competitive advantage. Uncertain Supply Chain
Management. 8(4). pp.753-760.
Salvi, H.B. and Pahurkar, R.N., Assessing the relationship between value chain analysis and
competitive advantage.
Online
Value chain analysis. 2020. [Online]. Available through:
<https://strategicmanagementinsight.com/tools/value-chain-analysis.html>.
[Online]. Available through : <>.
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