About Value Chain Analysis:
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. A value chain identifies and isolates the various economic value adding activities such as differentiating a product, lowering the cost, and meeting need quickly that occur some way in every firm. It portrays activities required to create value for customers of a given product or service. It tells where low cost advantages exist; in what ways each activity can be undertaken so as to differentiate it from that of a firm’s competitor, how to deliver satisfaction to customers as quickly as possible. Business is viewd as a process, a chain of activities in order to find the strengths and weakness of a firm operating in a competitive environment. Competitive advantage is created and sustained only when a firm is able to perform the most critical functions either more cheaply or better than its competitors. The value creating activities of a firm, according to Michael Porter suggested that the is grouped under two headings: (1) Primary Activities - those that are directly concerned with creating and delivering a product . (2) Support Activities, which are not directly involved in production, but may increase effectiveness or efficiency and work to enhance or to help the functioning of primary activities. Linking Value Chain Analysis to Competitive Advantage
A business which wishes to outperform its competitors through differentiating itself through higher quality will have to perform its value chain activities better than the opposition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources used. About Pizza Hut:
Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum! Brands owns Kentucky Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silver’s restaurants worldwide. Yum! generated more than US$ 25.9 billion in worldwide sales in the year 2003, and has more than 33,000 restaurants in over 100 countries.
Pizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since then it has captured a dominant and significant share of the pizza market and has maintained an impressive growth rate of over 40 per cent per annum.
Pizza Hut is believed to have close to 50 per cent market share of the organised pizza-retailing segment in India.
I have chosen few objectives of Pizza hut in Indian Market and how did it use Value chain analysis to achieve its objectives.
Pizza hut’s main strategy to remain competitive is being customer focused and service oriented. So its main objectives based on this are:
Objectives of Pizza Hut in Indian Market
•To provide world-class facility and taste to its Indian customers in a cost effective way. •To maintain uniform taste across all its outlets.
•To present its products when and where the customer wants within committed half an hour time. •To delight the customer, ie more beyond satisfaction.
Lets us see that how Pizza hut worked to achieve its objectives by improving its activities using value chain analysis.
VALUE CHAIN OF PIZZA HUT:
Buying of all raw materials as mozzarella cheese, pepperoni, sauce, base, potato, vegetables, wheat, babycorn, spices, chicken.
Preparing of pizza base. Customising Pizzas at outlets.
Outgoing shipping and Logistics:
Transporting pizza base to all pizza hut outlets, Delivery of Pizza to the customers, mainly in home delivery.
Catering to the needs of the customers before and after pizza supply.
Advertising and Campaigning of Pizza hut products.
It is mainly the support activities that make product differentiation or cost reduction and add...