Management Accounting

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
1