Asian Paints Value Chain, And Business Process

8/13/2019 Asian Paints Value Chain, And Business Process

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RISBT MUMBAI INDIA KEYUR DESAI Page 1

RIMS INTERNATIONAL SCHOOL OF BUSINESS &TECHNOLOGY

A PROJECT ON:

ASIAN PAINTS VALUE CHAIN, BUSINESS PROCESS

SUBJECT NAME:

MANAGING BUSINESS ACTIVITIES TO ACHIEVERESULTS

PRESENTED BY

KEYUR.P.DESAI

BBA FIRST YEAR

HIGHER NATIONAL DIPLOMA

PROJECT GUIDE

Prof. Mrs PRIYA CHOWDHURY

DATE OF SUBMISSION: 9/9/11




Q.1 Research on value chain analysis, analyse in detail and how business

manage using value chain analysis?

Ans Value chain analysis is the method of assessing strengths and weakness that

divides a business into a number of linked activities, each of which may produce

value for the customer, “ Michael E. Porter, Competitive Advantage: creating and

sustaining superior performance, chap.2 New York: the free Press, 1985”. The value

chain is a framework for analyzing the contribution of individual activities in a

business to the overall level of customer value the firm produce and ultimately to its

financial performance.

Another definition of value chain is that a high- level model of how business receives

raw materials as input, add value to the raw materials through various processes,

and sell finished products to customers.

Value chain analysis is a powerful tool for managers to identify the key activities

within the firm which form the value chain for that organisation, and have the

potential of a sustainable competitive advantage for a company. Therein, competitive

advantage of an organisation lies in its ability to perform crucial activities along the

value chain better than its competitors.

The value chain framework of Porter (1990) is “an interdependent system or network

of activities, connected by linkages” (p. 41). When the system is managed carefully,

the linkages can be a vital source of competitive advantage (Pathania-Jain, 2001).

The value chain analysis essentially entails the linkage of two areas. Firstly, the

value chain links the value of the organisations activities with its main functional

parts. Then the assessment of the contribution of each part in the overall added

value of the business is made (Lynch, 2003). In order to conduct the value chain

analysis, the company is split into primary and support activities (Figure 1). Primary

activities are those that are related with production, while support activities are those

that provide the background necessary for the effectiveness and efficiency of the

firm, such as human resource management. The primary and secondary activities of

the firm are discussed in detail below.

Primary Activities

The primary activities (Porter, 1985) of the company include the following:

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Inbound logistics: - These are the activities concerned with receiving the

materials from suppliers, storing these externally sourced materials, and

handling them within the firm.

Operations: - These are the activities related to the production of productsand services. This area can be split into more departments in certain

companies. For example, the operations in case of a hotel would include

reception, room service etc.

Outbound logistics: - These are all the activities concerned with distributing

the final product and/or service to the customers. For example, in case of a

hotel this activity would entail the ways of bringing customers to the hotel.

Marketing and sales: - This functional area essentially analyses the needs

and wants of customers and is responsible for creating awareness among the

target audience of the company about the firm s products and serv ices.

Companies make use of marketing communications tools like advertising,

sales promotions etc. to attract customers to their products.

Service: - There is often a need to provide services like pre-installation or

after-sales service before or after the sale of the product or service.

Support Activities

The support activities of a company include the following:

Procurement : - This function is responsible for purchasing the materials that

are necessary for the company s operations. An efficient procurement

department should be able to obtain the highest quality goods at the lowest

prices.

Human Resource Management : - This is a function concerned with

recruiting, training, motivating and rewarding the workforce of the company.

Human resources are increasingly becoming an important way of attaining

sustainable competitive advantage.

Technology Development : - This is an area that is concerned with

technological innovation, training and knowledge that is crucial for most

companies today in order to survive.




Firm Infrastructure : - This includes planning and control systems, such as

finance, accounting, and corporate strategy etc. (Lynch, 2003).

Below is the diagram of value chain analysis which represents the primary and

support activities in order to assess the firm internally.

Porter used the word „margin for the difference between the total value and the cost

of performing the value activities (Figure 1). Here, value is referred to as the price

that the customer is willing to pay for a certain offering (Macmillan et al, 2000). Other

scholars have used the word „added value instead of margin in order to describe the

same (Lynch, 2003). The analysis entails a thorough examination of how each part

might contribute towards added value in the company and how this may differ from

the competition .

Note that in a company with more than one product area, it is appropriate to conduct

the value chain analysis at the product group level, and not at the corporate strategy

level. It is crucial for companies to have the ability to control and make most of their

capabilities. In the advent of outsourcing, progressive companies are increasingly

making their value chains more elastic and their organisations inherently more

flexible (Gottfredson et al, 2005). The important question is to see how the

companies are sourcing every activity in the value chain. A systematic analysis of

the value chain can facilitate effective outsourcing decisions. Therefore, it is

important to have an in- depth understanding of the company s strengths and

weaknesses in each activity in terms of cost and differentiation factors .

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Now the author will take into consideration the company which he has chosen i.e.

Asian Paints ltd.

The author will first take into consideration the primary activities of the value chain

analysis of Asian Paints. The Author will explain one by one the primaryactivities of Asian Paints in detail.

CRITICAL ANALYSIS: -

1. Inbound logistics: - These are the activities concerned with receiving the

materials from suppliers, storing these externally sourced materials, and

handling them within the firm. Asian Paints over the years have a good

relationship with their suppliers and have long term contracts with their raw

materials. Personnel s are employed at all the head branches over the globefor overseeing the smooth transit of the raw materials i.e. pigments. With the

SAP*CRM technology driven in the firm all the transactions are process

through SAP with utmost transparency and monitoring the logistics. Lastly

there are efficient storage facilities where the raw materials are easily stored

and retrieved in all the manufacturing units around the world.

2. Operations: - This activity is related to the production of the products or

services. Asian Paints has enrolled automated manufacturing process in eachof units which has helped them to increase efficiency of the plants layout as




well as the work flow of all the departments for e.g. there is one unit

Dispersion unit where pigments are mixed with the binder and suitable

additives and are wetted with suitable dispersing agents then followed by

Adjustment and then followed by packaging. The adoptions of Japanese

techniques “Kaizen and JIT” have got the hold of production control systems

which has helped them to reduce the cost and as well as continuous

improvement in their working.

3. Outbound Logistics: - Stockyards, all across the country. Long term

contracts with carters – higher volume of business to transporters ensures

competitive price. Regional Sales Office and Vehicle Dispatch Section linked

through SAP, Efficient security system for prevention of any kind of theft.

4. Marketing and sales: - presence in PAN India and as well as global footprint

has helped them to increase sales. The ongoing mission of getting new

decorative paints as well as industrial Paints and chemicals have earned them

the position which they wanted i.e. No 1 in the Paints & chemicals industry.

Helping to augment the scarce resources like SCIB paints selling their paints

through Asian paints dealership, in return Asian has access to SCIB”s

technology and unutilized capacity.

Q.3) for your listed organisation define the various process used?

ASIAN PAINTS LTD business process Model




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Asian Paints Value Chain, And Business Process