Page 8 - OCS Workbook - Day 2 Suggested Solutions (May 2018)

CIMA MAY 2018 – OPERATIONAL CASE STUDY

CHAPTER NINE

EXERCISE ONE (VALUE CHAIN)

Briefing Notes
Porter’s value chain

What is Porter’s value chain?

Value chain analysis focuses on analysing the internal activities of a business in an effort to
understand costs, locate the activities that add the most value and differentiate from the
competition. To develop an analysis, Porter’s model outlines primary business functions as the
basic areas and activities of inbound logistics, operations, outbound logistics, marketing and sales,
and after sales service.

The model also identifies tasks found in the important support activities of infrastructure, human
resources management, technology and procurement.

The overall goal of value chain analysis is to identify areas and activities that will benefit from
change in order to improve profitability and efficiency.
Mansako’s primary activities
Inbound logistics

The production staff at Mansako are responsible for receiving and warehousing of raw materials,
and their distribution to manufacturing as they are required. Within the factory there is a raw
materials store.

The logistics system efficiently and effectively records the movements of all products into our
distribution centre. The processes for inbound logistics appear to be running well with no issues
highlighted.
Operations

Mansako’s design studio is based in New York and marketing activities are also based in New York
with the support of offices in Paris and Tokyo. The company’s products are manufactured at its
factory in Lowerland. It also has a single, company owned, distribution centre which is based in
Lowerland.
The company generates sales in Lowerland, the rest of Europe and in Asia, either by way of direct
company-owned stores, third-party owned retail partners (mainly high-end department stores) or
via the internet. Mansako currently has 119 stores, the vast majority of which are in Lowerland
and the rest of Europe. The company also has a presence in Asia, representing a small
percentage (7%) of total sales. Mansako owned stores are mainly located in city centre locations,
high-end shopping malls and airport shopping areas. They are fitted out to provide the
appropriate ambience as befits the Mansako brand.

The various operations within the company, from design through to distribution and sales, are
working well together to successfully attain high product quality standards.

64 KAPLAN PUBLISHING