Reflective Analysis of Internal Business Environment - Value Chain Model by Porter 1985

This article provides a reflective analysis of the internal business environment using the value chain model proposed by Porter in 1985. It discusses the concept of value chain analysis, the case study of Tesco, and the importance of managing the internal environment for business success.

Reflective analysis of the
internal business environment
- Value Chain Model proposed
by Porter 1985

Table of Contents
INTRODUCTION...........................................................................................................................3
Value chain model.......................................................................................................................3
Tesco............................................................................................................................................4
Internal environment....................................................................................................................5
Reflection on value chain model.................................................................................................6
Conclusion.......................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Porter’s value chain analysis model is defined as a strategic model which was given by
Michael Porter. According to this model, it is important for the companies to manage their
supply chain for developing good reputation among the market. This also enhances the value of
company within customers. If the organisation is able to provide products and services to
customers at actual time, they are able to work properly and meet the needs and demands of
customers. It is very essential for the company to manage the supply chain in order to have
proper functioning. The company considered in the following report is Tesco. This is a
supermarket chain of UK which is providing services across the world.
Value chain model
The value chain analysis is also known as porter's value chain analysis and this is a concept of
business management which was given by Michael porter in the year 1985. According to Dev
use of Michael porter, value chain analysis consists of collection of different activities which are
performed by an organisation for creating value among the customers. Value creation helps in
adding value to the company which leads to competitive advantage in market. This is helpful in
creating values and maximizing the profitability of the company. The main strength of porter’s
value chain analysis is the approach used by this model. the value chain analysis emphasizes on
activities and system with the customer as the main principle. It is not focus only on departments
and accounting expense categories. This is a process which is helpful in linking systems and
activities with each other and defining what is the effect of this on profit and cost of the
company. By using this analysis, it is easy for the companies to know what are the sources of
increasing the value of company what are the areas in which the company is making losses.
There are various activities such as primary activities and support activities in the porter's value
chain analysis. Primary activities are having effect on the maintenance, sales, production and
support of the services and products which are supplied to the customers. This consists of
following factors-
Inbound logistics - these are defined as the processes which are involved in storing, receiving as
well as internal distribution of the raw materials needed for making the product or service. It is
essential for the company to to develop good relation with suppliers for creating value.

Production – this is involved with all the activities like production line, production floor, etc.
these are the areas where inputs of products are converted into semi finished or finished
products.
Outbound logistics - these are defined as the activities which are associated with delivering of
services and products to the customers. These consist of storage, distribution and transportation.
Marketing and sales - this includes all the processes associated with services and products in
market and generating customer relationship.
Support activities of value chain analysis assist the primary activities. They are involved in in
forming the basis of any company. Support activity like human resource management is a great
value and importance within the primary activity operation and it also supports other activities
like outbound logistics and service.
Tesco
Tesco company was founded by Jack in the year 1919. This is the not the largest retailers reading
UK. These are supermarket chain which got the highest earning favourite after careffore and
Walmart. This is providing products and services in more than 14 countries. This company
which is providing services in different locations under different banner like Tesco express,
Tesco superstore, Tesco home Plus and Tesco metro. The current CEO of the company is Dave
Lewis.
Mission and vision of the company – the vision statement of Tesco is to become the supreme
business environment by the cooperation of customers where they can serve and various
communities can operate. The main reason for success of Tesco is to have the vision and
mission will help in in doing the best and achieving success. The objectives and goals of Tesco
is to become the most popular global retailer. This is helpful in enhancing the core business
within UK. It is essential for having strong business in non food items and cultivate different
retailing facilities like Tesco personal finance, tesco.com and telecom. Core competency is
defined as the unique way in which any organisation is performing. Each and every company
has its own core competency which differentiates it from other competitors. The core
competency of Tesco is the way in which it provides services to the customers by understanding
and analysing their demands and requirements. Main focus of Tesco is to provide their products

and services according to the demands and choices of the potential customers. This is the main
reason for success of Tesco in market.
Internal environment
The value chain analysis of Tesco is conducted while the planning process and all the possible
resources of the competitive advantage of this company are identified. There are various kind of
activities involved in this company e which are to be conducted in organised manner for success
of the firm. As per the value chain analysis, the company has to consider various activities as
economic rent sources. these are the activities which can act as barrier for the new entrant and
can cause disadvantages to the competitors. Tesco has to analyse various internal linkages among
the activities by using their value chain analysis. the internal linkage is defined as the
interrelationship between various activities of the same organisational unit. On the other hand,
the external linkage is between the business units of same or different companies. In case of
Tesco, the usage of value chain analysis will help in optimising finance, products as well as
information flow. This is helpful for the company in identifying as well as exploiting the
opportunities and minimising external threats. this is also helpful for filling various essential
gaps which affects the productivity of a company. Within Tesco, the implementation of value
chain analysis is helpful in improving product flow because of the increased demand and sales
forecasting. By using the value chain analysis, Tesco is able to improve the inventory
management and reduce the dealers of providing products to the customers. It is easy for this
company to track activities of the supply chain after analysing the value chain analysis. The
porter's value chain model is is one of the popular model in business environment. Tesco should
not have a rigid framework as it has to assign importance to all the primary as well as secondary
activities which are involved in the value chain analysis. The primary value chain activities
within Tesco are associated with producing and selling of the products to potential customers.
The analysis of primary value chain activities are helpful in improving the performance of Tesco.
Inbound logistics - this is very important for Tesco to develop strong relationship with suppliers
because this will help in receiving storing as well as distributing the product and services
effectively. This company has to face different challenges in product development faces if there
is no analysis of inbound logistics.

Operations - importance of analysing the operational activities increases when the raw materials
arrives at the company. Tesco is able to process the raw material into and product and launch
them within market effectively. The operation process includes both manufacturing as well as
service operations. This is helpful in enhancing the productivity and maximizing efficiency of
Tesco.
The support activities plays an essential role for the coordination and facilitation of primary
value chain activities within Tesco. Some of the secondary activities are mentioned below –
Firm infrastructure – this consists of different activities like accounting, legal issues, quality
management, strategic management and finance. it is important for the company to have any
effective infrastructure management which will help in optimising value of whole value chain.
Human resource management - it is essential for Tesco to analyse the human resource
management by evaluating various aspects of human resource like selection, recruitment,
rewards, training, performance management, etc. SAS effective human resource management
within Tesco, it is able to minimise the competitive pressure that depends upon commitment,
motivation as well as skills of employees.
Reflection on value chain model
According to me, give value chain analysis will help the products, finance as well as information
flow of Tesco. When there is improvement in information flow of Tesco, then it is easy to
identify as well as exploit various opportunities and diminished the external threat to the
company. I think that the continuous value chain evaluation will help in in overcoming the
problem of cabs which affect the productivity of different organisations. when there is effective
implementation of value chain analysis within Tesco, I think it is able to enhance the material as
well as product flow. The reason for this is improved sales and demand forecasting. I think
modern customers are having higher value and importance and they require quick response.
Nowadays, customers are having access to important product related data and information. Thus,
in case of Tesco, it is very important for the company to provide flow of information which will
help in enhancing the customer supplier relationship. value chain analysis of Tesco and the
implementation is helpful in highlighting as well as removing the flow of information and data. I
think that Tesco may lose the vision or overall strategy if there is dividing of different business

operations into activities. In case of value chain analysis, there is dividing of operations into
support and primary activities and these are not separable because of the increased complexity.
According to me, the process of division is time consuming and it is is important the essential
information. I think it will be difficult for Tesco to get the information and data if it is not having
and structured business information system. According to my opinion, Tesco should implement
value chain model for analysing the different functions and activities which are helpful in
providing the products as well as services to the potential customers in specified time frame. In
context of Tesco, I know that at this company highlights the benefits as well as differentiation
points of offered products for persuade in the customers which are offering better than the
competitor companies. There are various marketing as well as sales activities which Tesco has to
focus on like advertising, Salesforce, promotional activities, coating, channel selection and
channel members. I think that this company can use marketing funnel approach for structuring of
sales and marketing activities. This will help in managing the competitive dynamics and current
status of the company within market. According to my opinion, it is very important for the
company to enhance the competitive advantage and the activities. This may include assets,
intellectual capital or distribution network of the company. The value chain analysis of activities
within Tesco are understood by the sources of competitive advantage.
Conclusion
From the above discussion, it is analysed that value chain analysis is helpful for the
management of companies. This provides help in providing products and services to the
customers in effective manner. It is important for the companies to manage the work effectively
in order to have proper functioning of business activities. The primary as well as secondary
activities are managed in an effective manner for increasing worth of business.

REFERENCES
Books and Journals
Koc, T. and Bozdag, E., 2017. Measuring the degree of novelty of innovation based on Porter's
value chain approach. European Journal of Operational Research, 257(2), pp.559-567.
Flanagan, D.J., Lepisto, D.A. and Ofstein, L.F., 2018. Coopetition among nascent craft
breweries: a value chain analysis. Journal of Small Business and Enterprise
Development.
Kamalian, A.R. and Rahmatzehi, G., 2016. Quick-impact Business Value Chain Analysis, Case
Study of Greenhouse Production Schemes of Zahedan City. International Business
Management, 10(16), pp.3486-3491.
Online
Tesco Value Chain Analysis.2018.[Online].Available through:< https://www.essay48.com/value-
chain-analysis/13685-Tesco-Value-Chain-Analysis>
Porter’s value chain analysis.2013.[Online].Available through:<
https://www.toolshero.com/management/value-chain-analysis-porter/>