Page 11 - CIMA MCS Workbook May 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

TASK 2 – INTERNAL REVIEW

Suggested solution

Briefing note:

From: Finance Manager
To: Finance Director
Date: Today
Subject: Internal review

The Value Chain model can be used to understand the internal position of a company and how
the various activities can add value in the customer’s view. It can also be used to develop a
competitive strategy of either cost reduction or differentiation and decide on whether or not to
retain or outsource activities depending in whether they “fit” with an organisation’s distinctive
capabilities.

Within the value chain these activities are broken down into primary and support.

Primary Activities ‐ those directly concerned with creating and delivering the product or service,
i.e. sourcing the merchandise and selling the products to customer.

For JORD these would be the activities involved in the production process:

Inbound Logistics – the receipt and distribution of inputs to the process would include receipt of
raw materials and manufactured parts and assemblies into the manufacturing plant stores and
the storage and delivery of these products to production. This is obviously a key area for JORD
given that it is important to have the materials available for production and the uniqueness of our
JIT approach to customer interface.

Operations – would involve the design and manufacturing process which, as we are aware, is
complex. The advent of technology has provided more flexibility within this process and greater
efficiency and effectiveness, for example in our CAD and CAM design software. New technology is
always on the horizon and with the advent of “Building Information Modelling (BIM)” and “virtual
reality” in the home design we need to be sure that any new processes do not disrupt this key
activity but at the same time we need to be up to date to differentiate JORD from the other
competitors.

Outbound logistics ‐ would involve getting the goods to the final customer. In this respect JORD
has its own fleet of vehicles for transportation to clients’ sites. Ensuring that the customer has a
pleasant experience underpins the need to have our own fleet, however it may be the case that
given over capacity in the industry these vehicles and their drivers may be idle for periods of time
and be a drain on profits. This will need further investigation as part of the mission is to
continuously improve our service to customers, by being totally responsive to their needs. Any
change therefore in the process may have an impact on customer opinion and ultimately the
profitability of JORD.

Marketing and sales – occurs throughout the process with heavy emphasis on client contact
agreement at each stage of the process. The activities undertaken here can influence the success
of JORD considerably and we will need to be sure that we have the correct skill set in this critical
activity. In addition JORD has its own showroom on the site of the manufacturing plant. It would
be important to monitor the usage of this showroom in terms of footfall to determine if any value

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