The Question is :- Critically evaluate the case study provided in the attached (pdf) file . Highlight your analysis with recommendations . (800 words)* Guidance Notes and Format of the Assignment :- 1- Executive summary >> your report should include an Executive summary at the front of the report (before the content page ) which summaries the main points including key recommendations . ( 100 words )2- Content page.3- Introduction and Objectives of the report >> Short introduction to the report setting out the aims and Objectives of the report are, what the report will cover and why . (150 words ) .4- Assignment Question >> you need to critically evaluate the reburied questions while identifying the issues and problems .(800 words)5- Conclusion and learning derived >> the conclusion should briefly and clearly synthesize the key points of your analysis and what you learn . (150 words ) .6- Recommendations (150 words ) .7- References* The total of assignment = 1300 words
value_chain_analysis.pdf
Unformatted Attachment Preview
10
Global
BY TESSIE SAN MARTIN AND LESLIE FLINN
The
W rkforce
PHOTO ILLUSTRATION BY BRUCE BROWN
Opportunities
and the Value Chain
The economies of the 21st century look strikingly
different than those of just a few decades ago.
One factor is the dramatic decline in computing
and telecommunication costs over the past decade.
This gives rise to Moore’s Law: the power of information and computer technology grows exponentially as its cost diminishes. The emergence of new
information communication technologies suddenly
makes it possible—and increasingly inexpensive—
to move capital, knowledge and ideas, and even
labor, across national borders. These factors have
resulted in the need for firms to approach value
creation differently, and to re-think relationships
along every link in their value chain. Changes in
the value chain impact opportunities for workforce
development. Here we define the changing value,
and discuss how value chain analysis can be a powerful tool for anticipating workforce development
opportunities and challenges.
COMMUNITY COLLEGE JOURNAL
DEC 2002/JAN 2003
11
What Is the Value Chain?
The value chain is simply the set of activities through which a product or service is
created and delivered to customers. In
particular, value chain analysis is a key
tool for understanding the source of a
firm’s competitiveness.
Since the mid-1990s, competitiveness
has become the watchword for countries
and regions seeking economic growth,
particularly through expanded trade and
export earnings. Competitiveness can be
defined as continually sustained increases
in productivity resulting in higher wages
and living standards. It is also characterized by firm-level agility, efficiency and
increasing export market shares.
The value chain serves as an important
frame of reference for understanding
how forces like the Internet and related
information technologies create new
opportunities and threats for companies
and industries.
The Impact of Emerging
Technologies
The Internet can be a great tool for change,
but as Michael Porter and others have
pointed out, how firms deploy Internet
technology can change the nature of their
value chain, the structure of an industry and
their competitive advantage. These factors in
turn affect a firm’s profitability.
As Evans and Wurster (2000) highlighted, the economics of information in
the Internet age threaten to undermine
established value chains in many sectors
of the economy. Virtually every company
has had to re-think its strategy in fundamental ways. The Internet and the “democratization of information” that it has
engendered create the potential for altering companies and the way they do
business. For example, newspapers have
traditionally been vertically integrated
structures because of the significant
economies of scale in printing and distribution. What happens to that structure
and to the competitive advantage of
newspaper companies when highresolution tablets advance to the point
where they are considered viable alternatives to newsprint, or when it becomes
feasible to have editors or even journalists
directly e-mail the information, article, or
news report directly to the reader every
day, every hour?
Or consider what is happening in retail
12
COMMUNITY COLLEGE JOURNAL
banking as a result of changes to the
value chain produced by the use of Internet technology. The current business
model depends on a vertically integrated
value chain through which multiple
products are originated, packaged, sold,
and cross-sold through proprietary distribution channels. As Evans and Wurster
highlighted, because of advances in the
reliability and security of electronic exchanges, legal changes enabling digital
signatures and legally binding electronic
contracts, new Web-based applications
and financial management software, Web
sites will be able to provide many, if not
all, of the full range of retail banking
services. This means that banks can provide increased access to financial services
at greatly reduced transactional costs, and
can do it in a way that radically changes
the way they create value.
The application of Internet technologies
can lead to what has been called the “deconstruction” of vertically integrated value
chains (Evans & Wurster, 2000). This deconstruction does more than transform
the structure of a business or an industry.
It alters the source of competitive advantage for a firm. In some cases, existing
value chains will fragment into multiple
businesses, each with its own source of
competitive advantage, or new branding
opportunities will emerge. The possibilities are endless.
The Global Workforce
Emerging technologies have also changed
the way labor is deployed. Technologies
have allowed workers to be located in a variety of locations, far from a firm’s headquarters. While businesses can be rooted to
a geographic area, the labor force has become much more mobile. Increasingly,
because labor can flow across borders,
managers must think of world markets.
Typically, unskilled workers are recruited
locally, while for skilled workers national
and international labor markets are more
common.
Again, the globalization of labor can result in the deconstruction of value by altering the source of competitive advantage
for a firm. The creation of industry clusters, which are characterized by close and
open communications between cluster
companies and education providers
within the region, can change the impact
of labor on the value chain.
DEC 2002/JAN 2003
The Value Chain and Its Impact
on Workforce Development
You may be wondering what all of this
has to do with community colleges.
First, we believe that understanding
competitive dynamics is critical to community college presidents. It is part of
being able to identify where your clients—
both your students (labor) and the businesses that you partner with (firms)—are
heading, and what types of new clients
and new client needs, are emerging. The
value-chain concept is key to understanding the changing nature of demand for
skills, education and knowledge at the
firm and at the industry levels. Each of
those value-chain activities has a specific
set of skills and knowledge requirements
attached to it.
Second, close relationships between the
companies and education providers enable companies to articulate their needs
qualitatively and quantitatively to
providers. This is especially the case because community colleges themselves are
a key element of an industry’s value chain,
supplying workforce skills and other
knowledge management solutions. Understanding how the Internet and other
technologies can affect existing value
chains, or affect traditional industries and
create new or wipe out existing lines of
business is critical.
Third, the value chain can also be useful
for identifying the critical elements affecting an industry’s (not just a firm’s) competitiveness. As noted above, clusters of industry are often community or geographically
based. Community colleges need to become familiar with this construct, as a useful vehicle for, not just analyzing needs, but
also dialoguing with the business community about the investment priorities in education and training. Community colleges in
Hollywood, California, and in Napa Valley
have used this construct for many years as a
way of engaging the industries they serve in
a productive exchange about curriculum
needs and skills development priorities.
This in part has been an invaluable input as
educators in these industries have re-tooled
to meet changing industry requirements.
Competitiveness
Porter’s notion of competitiveness, defined as continually sustained increases in
productivity resulting in higher wages and
living standards, is characterized by firm-
level agility, increased firm-level efficiency
and increasing export market share. True
competitiveness is not based on cheap
labor, special tax exemptions, or continual
devaluation of currency, but on generating value through improved productivity,
quality, service and innovation.
Moreover, competitiveness is an intensely regional phenomenon, characterized by clusters of related and supporting
enterprises. Increasingly, competitiveness
analysis has been directed to industry or
sector clusters of firms and supporting institutions. This is because in many industries, the competitiveness of a particular
firm is affected not only by how well a
firm performs the many activities related
to getting its product to the customers,
but also how well the players along each
link in the value chain are performing.
Thus, a key to analyzing how firms gain
and sustain competitive advantage is the
value chain. A value chain consists of all
the activities a company performs to design, produce, market, deliver and support its product. The value chain of companies that supply and buy from one
another collectively make up an industry’s
value chain: this is the configuration of
competitors, suppliers, distribution channels and customers.
The Egyptian Tourism Cluster
Egypt has a number of terrific attributes,
a rich historical legacy, wonderful beaches,
and a friendly labor force. But Egyptian
tourism leaders were losing ground to
other competitors in the region, like
Tunisia, Jordan, Turkey, Israel. Moreover,
although the absolute number of tourists
coming to Egypt had been rising, the number of repeat visits by these tourists was
minimal. This is in contrast with major
tourist destinations, like Disney World,
with more than 70 percent repeat business. We were asked to develop a workforce strategy to enable Egyptian tourism
to compete more effectively in the global
marketplace.
In identifying the elements affecting the
Egyptian tourism industry cluster’s competitiveness, our team of consultants first
analyzed the structure of the industry’s
value chain. We looked at the cluster in
several ways. First, we examined the types
of activities that comprised it. The Egyptian tourism cluster can be divided into
four broad categories. (See Figure 1.)
• Attractions (what are people looking to
holders and players in the Egyptian tourism
“experience” as tourists): museums; arche- cluster, and how each was performing its
ological sites; beaches/resorts; natural atown set of firm-level activities, we analyzed
tractions; sporting attractions; entertainthe interactions between cluster members.
ment (shows, casinos, nightlife).
In particular, we examined the set of activi• Facilitating Industries (who helps them
ties that affect a typical tourist’s “experiget around in Egypt): hotels and accomence” in Egypt. We asked, “what activities
modations; restaurants; somestic and ininfluence the typical tourist experience:
ternational transportation; travel agencies; from the time he or she thinks about going
travel operators; travel guides.
on a holiday (moved perhaps to see one of
• Related and Support Industries (support
Egypt’s premier attractions, like the pyraservices that directly affect the tourist exmids), to the time spent searching for vacaperience): cleaning services; catering servtion options through travel agents or the
ices; food producers; linens; advertising;
Web, to the time spent in the plane, the airgeneral merchandising; others.
port, the arrivals and immigration hall, the
• Cluster Foundations (infrastructure and
taxi to the hotel, the restaurant, the bank
back office services that indirectly affect
changing money and so on.” Figure 2 illusthe experience): training providers; banks
trates this analysis.
and other financial institutions; governThe analysis was enlightening to both
ment and tourism associations; promotourism establishments and to those providtion organizations.
ing training and education services to the
Within this larger cluster, there are sevindustry in Egypt. In particular, it became
eral high-impact segments, such as hotels,
clear that the ability of the industry to comtravel guides and tourist-class restaurants.
pete with similar archeological or “sun and
Hotels are the crux of the tourism cluster. sand” attractions in Tunisia, Turkey or even
They act as a catalyst for the development
Mexico, depended not just on how well a
of the entire cluster. They engage in profive-star hotel chain like Marriott, the Four
motional activities to maintain profitable
Seasons, or Hilton trained and educated its
occupancy rates, thereby providing cusown staff, but also how well other establishtomers for all other segments in the
ments affecting the tourist experience along
tourism cluster. Hotels managed by interthe value chain performed. It was easy to
national chains have the marketing skills
see from this crude chart that it was possiand resources to promote their locations to ble for Hilton or the Four Seasons to do a
the international market.
superb job at training its staff. But if the
Hotels act as cluster anchors, exerting
airport experience was Kafkaesque, if the
strong “pull-through effects” with their sup- individual felt ripped off or endangered in
pliers and related industries. International
the taxi ride to the hotel, or if he became
hotel chains tend to bring with them a netsick when he went out to eat outside the
work of support firms, including travel
hotel, the entire tourist experience for the
agencies, tour operators, and even transport individual would be ruined. This phecompanies. These in turn generate employ- nomenon in fact could very well explain
ment of their own, and engage in their own why the number of repeat visits to Egypt
promotional efforts to bring visitors to
was so low. Despite efforts by hotels to
the particular region where they are
upgrade facilities and staff skills,
located.
other elements of the value chain
Attractions
After obtaining a thorough
also needed attention.
understanding of the stakeWhat has resulted from
this collective analysis
Facilitating Industries
Figure 1. Egyptian
is an industry-wide
Hotels • Restaurants • Tour Guides
Travel Agencies • Int’l. Transportation
Tourism Cluster
effort to upgrade
Related & Support Services
Cleaning Services • Catering Services • Linens
Food Producers • Advertising • General Merchandising
Cluster Foundations
Training Providers • Banks • Other Financial Institutions
Government & Tourism Associations • Promotion Organizations
COMMUNITY COLLEGE JOURNAL
DEC 2002/JAN 2003
13
staff skills, some of this funded by
USAID. Our firm is currently undertaking a major industry training initiative,
linking the Egyptian Federation of Tourist
Chambers with the American Lodging
and Hotel Association’s training services
division. The value chain analysis helped
point out those areas and establishments
that most needed to upgrade skills.
Applications Elsewhere
Our team in Egypt also performed a similar value chain analysis in the agribusiness
Figure 2.
sector. Again, we wanted to identify what
were the critical skills development areas
for every element of the value chain, from
seed to table. The objective was to arrive
at a set of programs for the industry cluster that would be timely and help address
the most serious binding constraints of
the industry. Figure 3 shows one of the
several charts created for this purpose.
The results in the case of agribusiness
were surprising to the stakeholders involved in the analysis as well. The findings
indicated that transport was not the binding constraint (which was certainly the
perception going into the analysis).
Skills Gap Analysis: Tourism
Egypt Findings
Airports Banks
Taxis
Hotels Restaurants Entertainment Guides
Tourist Experience
Arrival
•Prompt
customer
service
Key Skills gaps:
Promotion
•Diversity of
cuisine
•Healthy cuisine
•Hi-techinternet based
reservations
systems
•Team work
•Hygiene
•Prompt
customer
service
Departure
•Certificate in
antiquitie,
ecotourism, Evaluation
adventure
travel
•Language
Figure 3.
Agribusiness Supply Chain
•Freight forwarding and documentation
•Logistics
EGYPT AGRIBUSINESS CLUSTER SUPPLY CHAIN
Egypt: Findings
Land
Preparation
&
Planting
Crop
Management
&
Care
Machinery
Repair
Maintenance
Field
Handling
&
Harvesting
Quality
Control
&
Grading
Financing
&
Insurance
Packaging
&
Labeling
Transport
Refrigeration
Export /
Import
Logistics
Market Research
&
Intelligence
CLUSTER SUPPORT SERVICES
•Machinery operation and maintenance
14
COMMUNITY COLLEGE JOURNAL
•Market and brand development
•New product development
DEC 2002/JAN 2003
Going Forward
A key lesson from these exercises is that
community colleges must strive to understand the strengths and weaknesses of the
industries they serve. We have found the
value chain approach to be a useful device for both understanding constraints
to competitiveness at the firm level and
for identifying common skills development, training and education needs and
priorities at the industry level. In Egypt,
it has served as a tool for assisting in curriculum planning and has begun to bring
together industry and education community leaders in ways that were unthinkable a few years ago.
Leslie Flinn is a principal consultant and
Tessie San Martin is a partner at PriceWaterhouseCoopers Consulting’s Government
and Services practice, Washington, D.C.
•Language
•Quality and standards
•Worker hygiene
Rather knowledge of packaging and
labeling requirements and skills in export
logistics management were key areas.
In both the agribusiness example and
the tourism example, the exercise of
analyzing the value chain to identify key
weaknesses detracting from an industry’s
competitiveness, and to arrive at priority
areas for training and education, was conducted with the full participation of the
key training and education providers to
the industries in question. The exercise
served to create a new set of linkages
between the academic and training
community and the industry that simply
did not exist previously.
Delivery
&
Documentation
Promotion
&
Sales
References
Porter, Michael E. “Strategy and the
Internet,” Harvard Business Review,
March 2001, pp. 63–78.
Evans, Philip B. and Wurster, Thomas S.,
“Strategy and the New Economics of
Information,” Harvard Business Review,
September-October 1997, pp. 71–82.
Friedman,Thomas L. The Lexus and the
Olive Tree, Anchor Books, 2000.
Johnson William B., “Global Workforce
2000: The New World Labor Market,”
Harvard Business Review, March-April
1991.
Porter, Michael E. The Competititive
Advantage of Nations, The Free Press,
1998; and “Clusters and the New
Economics of Competition,” Harvard
Business Review, November 1998.
…
Purchase answer to see full
attachment
Recent Comments