Internal Value Chain Analysis for Ben and Jerry's Ice Cream USA - Case Study Example

Student’s Name Professor’s Name Course Name November 3, 2013 Internal Value Chain Analysis; Ben & Jerry's Ice Cream USA Competitive advantage for an organization is taken to mean not just the ability to surpass or to match what the competitors have been able to do, but focusing on the discovery of what the customers really want and thus, profitably satisfying them and giving them services and products in the way that will exceed their expectations. Ben & Jerry's Ice Cream are aware that in the modern business world, the international and inter- regional trade barriers to trade have greatly diminished and therefore, the access to goods and services has tremendously increased, the customers can easily get what they want from any location in the world as long as client satisfies their needs and wants at a price that they can readily afford. It is worth mentioning that as the competition increases, there is a corresponding increase in the customer expectations, the complacency penalty for customers is even greater (Porter & Teisberg 23-45). A strategic tool that determines the importance of the perceived value of a customer is the value chain analysis. Having created the possibility for companies to establish what their strategic advantages and strategic disadvantages are in terms of the value creating processes and activities in their respective market places, the value analysis process becomes an integral element in the course of assessing the competitive advantage of the firm (Porter & Teisberg 44). Ben & Jerry's Ice Cream managers and accountants have led the efforts that have been geared towards the implementation of the value chain analysis in their organization. The idea behind value chain analysis depicts a trend in which the value of the customers accumulates in a chain of the activities, which results to an end product and service. Value chain analysis can be described as those processes carried out internally or those activities performed by a company. These activities are the designing, producing, and marketing, delivering and supporting its product. It must be noted that value chain analysis of a company and the ways in which it performs its activities individually is a true reflection of its strategy, the implementation strategy, and the economics of the individual activities and the history of the company as a whole. Ben & Jerry's Ice Cream carries out their business activities in two major categories: the primary activities and also the supportive activities. The organization uses the primary activities to transform the inputs into the variety of its outputs that might include; the super premium ice cream, frozen yogurt, Greek frozen yogurt, sorbet and ice cream. The organization also offers the after sales services and delivery of its products to the customers. This has gone a long way in creating the customer loyalty and increasing its clientele base (Porter & Teisberg 46-47). The after sales services and support offered by the firm are its line of activities, they include the inbound logistics; this entails the handling of the materials of Ben & Jerry's Ice Cream and its subsequent warehousing activities. Next, there is the operation which entails the transformation of the inputs into the final products availed to Ben & Jerry's Ice Cream’s consumer. Then, there is the outbound logistics; this entails the processing of orders and later, distributing them to the customers. Sales and marketing that entails the communication, channel management and also, the services that deals with the installation of the most recent and modernized plant and technology, its repair and replacement in order to facilitate continual production of more quality goods and offering competitive services to its customers. The supportive activities within the Ben & Jerry's Ice Cream are meant to support the primary activities. These activities are majorly handled by Ben & Jerry's Ice Cream staff. The functions of these supportive activities might include: Procurement, this entails the purchase of the raw materials that are used in the production of the Ben & Jerry's Ice Cream products, the consumable products and other supplies and assets of the organization. Technology development, this is used by Ben & Jerry's Ice Cream to acquire the technological inputs, which are required and also, the know-how and procedures that are needed in every activity of the value chain analysis. This has ensured that Ben & Jerry's Ice Cream use the latest plant and equipment and cooling technology that make sure consumer products are of good quality by the time they get to the final consumer (Porter & Teisberg 46-48). Human resource management, this is division of the Ben & Jerry's Ice Cream that deals with the selection, the promotion and the placement of staff, their appraisal and promotion and the relationship that subsist between the employees and numerous labor unions. This evaluation section of the company ensures that it is only the best of the staff, which are selected in the course of generating products for Ben & Jerry's Ice Cream and also, the activity is extended to its distribution processes (Porter & Teisberg 48). The infrastructure of the firm, this is used by Ben & Jerry's Ice Cream and applied in the general management , planning, finance, legal, accounting, quality management and the government affairs. It must be mentioned that Ben & Jerry's Ice Cream is aware that its level of value chain analysis is depended on the value creating activities that starts right from the basic sources of the raw materials, the suppliers of the components all the way to the end product used that are delivered to the hands of the customer. This transforms Ben & Jerry's Ice Cream Company into being the overall participant within the chain of the value creating process. Also, this ensures that the products of Ben & Jerry's Ice Cream, to a greater extent, continue to be of high quality surpassing the market expectations of the consumers and towering highest among the competitors within the industry (Porter & Teisberg 48). Competitive Advantage and the Customer’s Value; It must be mentioned that for Ben & Jerry's Ice Cream to prosper within the food industry, the organization is expected to meet two critical criteria. The organization has been able to supply what customers have always wanted to buy and also, they have been able to survive the stiff level of competition. The overall competitive advantage of Ben & Jerry's Ice Cream has been derived from the difference that results from the value that it offers to its customers and the cost that the organization incurs while creating that value (Porter & Teisberg 45). The competitive advantage nature of Ben & Jerry's Ice Cream has assumed two substantial forms; first, there is the differentiation advantage. Ben & Jerry's Ice Cream consumers of its products have a perception that the organization generates products, which are of superior quality. This has made the organization’s customers to pay more, what is referred to as a premium price as compared to the price that they would ordinarily pay for the competitor products. Second, the company enjoys the low cost advantage that benefits its customers on some products of the company. This occurs whenever the total costs of Ben & Jerry's Ice Cream production activities are undercut below the level of the costs of its key competitors. Differentiation Advantage Ben & Jerry’s Ice Cream’s customers have continuously perceived the organization as being able to produce superior quality products and that there are fewer risks associated with the use of the company products. They also perceive that the products of the organization, to a larger extent, outperform the competitor products. Ben & Jerry's Ice Cream has created differentiation advantage by delivering the goods to its customers on a timely basis, by producing the best quality of the products and offering a wide range of goods and services. In this regards, Ben & Jerry's Ice Cream is concerned with creating unique value to its customers Having successfully differentiated its market offerings, Ben & Jerry's Ice Cream has exploited this advantage by selling its products at a slightly premium price, which is geared towards maintaining a significant portion of the current market share. Low-Cost Advantage Ben & Jerry's Ice Cream enjoys a relatively lower-cost advantage, in that, its total cost are lower than the average market cost. This has enabled Ben & Jerry's Ice Cream to price some of its products at a price lower than its key competitors. This has aided the organization to gain a substantive market share while maintaining its profitability level. The company has also matched the price of some of its products in its quest to increase its profitability. This has successfully worked for Ben & Jerry's Ice Cream since most of its customers who use its products can buy them at the same price as those produced by competitors. Its lower market cost than the industry average and the increased customer base has facilitated the attraction of customers due to the superior quality of the Ben & Jerry's Ice Cream products. The organization has been successful as it can be perceived by its increased levels of profitability. In order to cut its costs, Ben & Jerry's Ice Cream has an access to raw materials at a relatively lower cost, it has integrated a very innovative technology within its production process, it also make use of lower cost channels of distribution for its products. The organization enjoys a superior management in its operations. It must be mentioned as well that, Ben & Jerry's Ice Cream enjoys lower costs due its operations in large scale and thereby, reaping from a substantial economies of scale. It is worth mentioning that Ben & Jerry's Ice Cream has realized that it needs to carry out a cost analysis. This will aid the organization in estimating its total costs and profitability. It is also critical in establishing the distribution channels of customers and also, in developing the variances within the financial performance. The organization has been effectively conducting its business operations through its qualified and experienced staff within the accounting division who has also exploited their skills in undertaking activity based costing, re-engineering of the organization’s processes and benchmarking. They have also been successful in target costing, economic value chain analysis, quality management and life-cycle costing. All this have given Ben & Jerry's Ice Cream a competitive edge within the market. Ben & Jerry's Ice Cream Company thus thrives by concentrating on those particular activities that will aid them to capture the most of the existing value; both the customers and the businesses at large. This approach, of value creation, is an integral part of Ben & Jerry's Ice Cream strategic planning process. The organization engaging on a continuous value chain analysis by gathering and compiling, analyzing and communicating information that is fundamental in the process of making economic decision for the organization as a whole. In conclusion, it has been noted that Ben & Jerry's Ice Cream has been keen in conducting value creation. This has given the organization a competitive advantage over its immediate competitors. This has resulted into increased profitability of the organization. The value of Ben & Jerry's Ice Cream has increased more than its costs. It has also been mentioned that the organization has employed the primary activities and the support activities all of which have resulted to value creation. Works Cited Porter, M. E., & Teisberg, E. O. Redefining health care: creating positive-sum competition to deliver value. Boston, Mass, (2005). Harvard Business School Press Read More