Page 10 - MCS August Day 2 Suggested Solutions
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CIMA AUGUST 2018 – MANAGEMENT CASE STUDY
TASK 2 – VALUE ANALYSIS
Suggested solution
To: Production Director
From: Financial Manager
Subject: Value analysis
Date: Today
Value Chain Analysis can be used by Montel to describe the activities that take place and relate
them to our competitive strength. It is also one way of identifying which activities are best
undertaken internally and which are potentially best provided by others ("out sourced").
Value chain analysis is a three‐step process:
Activity analysis: firstly, identify the activities undertaken to deliver the product or service.
Value analysis: secondly, for each activity, consider what you would do to add the greatest
value for your customer.
Evaluation and planning: thirdly, evaluate whether it is worth making changes, and then
plan for action.
Value Chain ‐ is a framework that could be used by Montel to help it understand its internal
capability. It can be used by to analyse the different value adding activities that are the basis of its
strategic capability, and assist us in understanding our internal strengths and weaknesses. By
breaking activities down into strategically relevant pieces it will allow Montel to see a fuller
picture of the cost drivers and sources of differentiation, and then make changes appropriately.
Part of this would involve assessing whether the strengths of Montel provide value to the
customer, and benchmarking its strengths against the competition for comparison and
development of best practice.
Primary Activities ‐ those that are directly concerned with creating and delivering the product (e.g.
for Montel lens production and camera assembly ‐ Operations)
Support Activities which, whilst they are not directly involved in production, may increase
effectiveness or efficiency (e.g. involving the recruitment of highly experienced staff ‐ Human
Resource Management).
The first step is to brainstorm the activities Montel undertakes. It is rare for a business to
undertake all primary and support activities but with Montel this may be the case.
Primary activities:
Inbound logistics – activities that involve receiving, storing, distributing and handling inputs to the
process. For Montel this would be e.g. the receipt of raw materials for lens production at the
factory in Northtown and Eastown.
94 KAPLAN PUBLISHING