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Operations and Controlling

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Operations / Controlling (DB)

The computer microchip industry is very competitive, and companies are always looking for new ways to reduce costs without compromising the quality of the product to prevail in this aggressive market. That's why the manager(s) of the Smart Chip Company need the strategies and the tools that can help him to achieve the company's goals. The concept of Michael Porter's Value Chain Management can help managers to evaluate their companies or business in different activities that are especially important for competitiveness and for the attainment of the company's overall goals. It also gives managers an opportunity to analyze which activities give the product more added value and which don't. The value chain describes the activities within and around the business or company that create the final product or service. The cost and value of these activities, will determine whether or not best value products are being made and if they will satisfy the customer's needs and taste.

According to the Value Chain Analysis the business' activities are grouped as: Primary activities and Support activities. The primary activities are the ones that are directly concerned with the elaboration or creation of a product or service, and the support activities assist the primary ones in helping the company achieve its competitive advantage. The primary activities can be grouped into five main areas:

- Inbound Logistics: this refers to all those activities concerned with receiving and storing externally sourced materials ready to be used for manufacture the end product.

- Operations: those are the processes of transforming inputs into finished products or services.

- Outbound Logistics: Once the products have been manufactured they are ready to be distributed to wholesalers, retailers or customers.

- Marketing and Sales: the marketing department must make sure that the product is being targeted to the correct customer group by using effective strategies. They need to inform buyers and consumers about products and services (benefits, use, price, etc.)

- Services: is important the company support the customers after the product/service has been sold. This may come in the form of warranties or guaranties of the product or service.

These primary activities are complemented by the support activities which are:

- Procurement: this has to do with the acquisition of inputs or resources for the organization such as raw material to create the product. It's important trying to obtain the best prices and the best quality possible.

- Human resource management: consists of all activities involved in recruiting, hiring, training, developing, compensating



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