Value Chain free essay sample

The value chain, made by Michael Porter, is really important to see how a company structure is created. The value chain is constituted by two parts: support activities (firm infrastructure, human resource management, technology development, procurement) and primary activities (inbound logistic, operations, outbound logistic, marketing and sales, service). (Johnson et al. 2011, p. 97-99) Support activities: * Firm infrastructure: Hamp;M is present in 44 markets in the world, holds more than 2,500 stores and employs over 94,000 people. Its head office is located in Stockholm, Sweden where there also are the main departments for finance, buying and design, advertising, accounts, communications, logistics, security, IR, HR, expansion, interior design and display, IT and CSR, expansion and environment. Furthermore, Hamp;M has multiplied its offices in 25 countries which are each responsible for a various departments in every country. Hamp;M works with approximately 700 independent suppliers and all the contracts are managed by 16 productions offices. We will write a custom essay sample on Value Chain or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Hamp;M, 2012) * Human resource management: HRM are really important for a company because of the fact that its results are directly impacted by the satisfaction of the employees. In order to satisfy its employees, Hamp;M has adopted many rules (Hamp;M,2012): * Hamp;M’s code of conduct: All the suppliers had to sign a contract which guarantees well-working condition and a right salary to their employees and protects children from illegal working * Win-win model: Whenever Hamp;M enters in a new market, it employs local workers. However, Hamp;M offers to its employees opportunities to change working place (cities or countries) but still stay in the company. Thus, employees could have the opportunities to improve their qualifications staying in the same company, and, at the same time, Hamp;M can keep experienced and trustful workers. Thanks to that, Hamp;M is named as one of the best companies to make a career in. * Technology development: As a cloth’s retailer, Hamp;M has not a lot to develop in technology. Nevertheless, Hamp;M could keep progressing in its online store. Indeed, even if Hamp;M is present in 44 countries, only 8 have access to the online tore (Sweden, Germany, UK, Norway, Denmark, Austria, USA and Netherlands). Increasing it, Hamp;M could increase its sales a lot. * Procurement: As it is the second Europe’s cloth retailer company, for the production Hamp;M uses a lot of material and workers so its mains recourses are material, labour and energy. That is why small changes in pric es can affect the company’s profit a lot, and the fact that it does not own any manufactories causes some problems in controlling the production’s prices. However, not owning the factories can be an advantage in some cases. Indeed, if a problem appears, Hamp;M can easily change its suppliers. Moreover, due to its huge size, Hamp;M can easily manipulate with its suppliers to have the best quality at the lowest production’s price. Primary activities: * Inbound logistic: One of the core values of Hamp;M is the sustainability, and, thus, sustainability in production. The aim of Hamp;M is to offer good quality fashion at the best price and to achieve it, Hamp;M tries to avoid the waste. In this purpose, all the waste coming from the manufacturing, the transport and other sources are planned to be reused, recycled and reduced. Hamp;M, 2012) * Operations: Hamp;M makes only one operation which is the design, as other operations are made by the suppliers. Hamp;M has its own 100 designers and 50 designers work by the patent. These designers take their inspiration from the street fashion, the movies, travel and other cultures, the media and trend institutes. Moreover, designers are achieving a huge job to f ind a way to create fashionable clothes at the best price. (Hamp;M, 2012) * Outbound logistic: This part of the value chain includes information systems, transportation, material handling, communication and packaging. As Hamp;M does not own its suppliers, the logistic system has been developed in a efficient way. To transport its production, Hamp;M sends firstly all the merchandise to the distribution centre (the main centre is in Hamburg, Germany), then the goods are transferred from the distribution centre to the allocated stores where they are being unpacked. Moreover, in agreement with its ethical value, Hamp;M tries to minimise the pollution during the transports and favours ocean, rail and road transportation. (Hamp;M, 2012) * Marketing and sales: All the loth retailer company requires a high level of marketing to compete in the markets, and Hamp;M’s marketing can be split in few groups to be analysed: * Price: As Hamp;M has a huge size, it has a lot of opportunities to decrease its production’s costs: it deals with its contractors buying everything in huge quantity and that is why Hamp;M always control the negotiations. * Quality and durability: Nowadays, customers pay attenti on to the design and the price of clothes but also on the quality of it.