MN1001 Business Environment

1
MN1001Business Environment

• The Value Chain in Services

2
What well cover today

• Porters framework designed primarily for
  manufacturing business
• Can be useful for service businesses
• Walmart
• Prêt à Manger
• Addressing assumptions
• should be able to identify an industry

3
Traditional Sandwich Bar Value Chain
Firm Infrastructure
Finance
Human Resource Management
Technology Development
M a r g I n
Procurement
Supplier delivery
Food Packaging
Shop fittings
Van Maintenance
Van deliveries
Customer relations
Merchandising Sandwich assembly Till
service Clearing up
Sandwich assembly for delivery
Inbound logistics
Operations
Outbound logistics
Marketing/ sales
Service
4
Values for a traditional Italian sandwich bar
Margin 12
Make to order -dream up your own
recipe -supervise while it is being executed
Labour 30
Materials 28
Accommodation 30
5
Comparison Traditional Sandwich Bar vs. Prét a
Manger
Traditional
Prét a Manger
Margin 7
Margin 12
Pre-made -self-service off shelf -wide range
Make to order -dream up your own
recipe -supervise while it is being executed
Corporate overheads 13
Labour 30
Labour 20 - Kitchen -Counter
Till service in seconds.. Quality assured
Wait in line for service.. -freshness of
ingredients? - hygiene of staff?
Materials 45 -bread -filling -packaging
Materials 28
Accommodation 30
Accommodation 15
6
Value Chain Prét a Manger
Firm Infrastructure
Quality management/ Strategic Management/ Finance
Staff training
Human Resource Management
Develop/ control recipes
Customer flow design
Technology Development
M a r g I n
Schedule supplies
Rentokill laboratory
Procurement
Till systems fittings
-Baking -Sandwich assembly -Mise-en- place
prep. -Cleaning
Goods receipt -fresh - dry
Van deliveries
Customer relations
Merchandising Till service cleaning
Inbound logistics
Operations
Outbound logistics
Marketing/ sales
Service
7
Values for Prét a Manger
Margin 7
Corporate overheads 13
Labour 20
Materials 45
Accommodation 15
8
Operating CostsPrét a Manger
Primary activities
Support Activities
Inbound logistics
Outbound logistics
Firm Infrastructure
Operations
Marketing
Service
HRM
Technical
Procurement
Margin
Corporate overhead
4
3
3
3
Labour -kitchen counter
lt 1
11
lt 1
8
Materials -bread -filling -packaging
45
Accommodation -rent -rates -utilities
9
6
9
Operating Costs Prét a Manger
Firm Infrastructure
4
Human Resource Management 3
Technology Development 3
Procurement
3
Margin 7
Operations 65
Marketing Sales 14
Outbound logistics lt 1
Inbound logistics lt 1
10
Assets Prét a Manger
Firm Infrastructure
3
Human Resource Management 1
Technology Development 3
Inbound logistics 8
Marketing Sales 64
Operations 18
Procurement lt1
Service lt1
Outbound logistics
11
AssetsPrét a Manger
Primary activities
Support Activities
Inbound logistics
Outbound logistics
Firm Infrastructure
Operations
Marketing
Service
HRM
Technical
Procurement
Cash
1
2
Debtors
4
3
Stock
3
1
2
Vehicles
Shop fittings
13
3
lt 1
5
9
Leaseholds
lt 1
50
1
9
1
12
DifferentiationPrét a Manger
Firm Infrastructure
Human Resource Management

• Superior
• recipes
• Premake

Technology Development
M a r g I n
Stylish outlets
Consistent Quality
Procurement

• Consistent
• generous
• portion
• home baked

Prime locations Fast service
Responsive
Inbound logistics
Operations
Outbound logistics
Marketing/ sales
Quality
Service
13
Cost Management Prét a Manger
Overhead diseconomies mitigated by scale
Firm Infrastructure
Training to reduce staff t/o/ increase
versatility
Human Resource Management
Effective forecasts
Technology Development
M a r g I n
Scale
Procurement
Hi materials cost minimised by scale
Lo service costs
Hi asset utilization
Hi labour utilization
Inbound logistics
Outbound logistics
Marketing/ sales
Service