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Value chain

David Covington recently opened his own company; he imports fine ceramic gifts from Mexico. He has been thinking of ways to improve the business. Here is a list of the action that he will be undertaking.
1. Engaging an accountant to help analyze progress in meeting the objectives of the company.
2. Hiring a company to handle payroll records and employee benefits.
3. Developing a logo for labeling and packaging the ceramics.
4. Making gift packages by placing gourmet food products in ceramic pots and wrapping them in plastic.
5. Engaging an attorney to write contracts.
6. Traveling to Mexico himself to arrange for the purchase of products and their shipment back to the company.
7. Arranging new ways of taking orders over the Internet and shipping the products.
8. Keeping track of the characteristics of customers and the number and types of products they buy.
9. Following up with customers to see if they received the products and if they are happy with them.
10. Arranging for an outside firm to keep the accounting records.
11. Distributing brochures that display the ceramics and refer to the website.

A. Please classify each of Covington's action as one of the value chain's primary processes-research and development, design, supply, production, marketing, distribution, or customer service-or as a support service-human resources, legal services, information systems, or management accounting.

B. Of the 11 actions, which are the most likely candidates for outsourcing? Why?

Solution Preview

David Covington recently opened his own company; he imports fine ceramic gifts from Mexico. He has been thinking of ways to improve the business. Here is a list of the action that he will be undertaking.
As per Netmba, In 1985, Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified primary and support activities as shown in the following diagram:
The primary activities are:

Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service

Secondary activities ...

Solution Summary

Response discusses the value chain and different ways to improve a business.

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