Business environment refers to the sum of all internal as well as external factors which impacts on the business activities (Chen, 2018). Whereas, internal business environment defined to the several components that are present inside the organisation which can effect the choices, decisions as well as activities of a firm. The aim of internal analysis is to examine the strengths, weaknesses, competencies, competitive viability, cost position etc. and it considers the resources, objectives, policies, plans etc. Unilever is chosen as a study of internal business environment analysis which is a British-Dutch transnational consumer good company. Under this essay study about the company, value chain model, internal environment as well as provide reflection.
Value chain model
The value chain model is propounded by the Michael porter in 1985 which is highly popular in the business world. This model visually represents all activities with equal weight and focus on the real requirements of a company. As this focused on the systems of an organisation, how inputs are converted into outputs and buy by the customers. It includes primary as well as supporting activities (Hamilton, 2018). Primary activities includes inbound logistics, operational, outbound logistics, marketing and sales as well as services as all these are directly related to the physical creation, maintenance, sale and support of goods and services. Whereas, secondary or supporting activities involves procurement, human resource development, technological development as well as infrastructure of a business organisation that helps in supporting primary activities. For instance, procurement supports the operations along with the many activities as well as supports marketing and sales activities with another one.
In primary activities, inbound logistic refers to the whole processes of receiving, storing as well as distributing the raw materials or inputs within the organisation. Here, the key factor for creating a value is suppliers relationships (Ibarra, 2018). Operations refers to the transnational activities which converts their raw material into finished goods which are sold to their potential customers. Here, the operational system is a key factor for creating value. Outbound logistics is defined as an activity which is used for distributing products to the end users such as receiving, warehousing and distributing activities which may be internal as well as external for a business. In marketing and sales activity the sources of creating value is communication and benefits which a company offer to their customers and persuade customers to buy from them rather then their competitors. Services refers to the after sale activity which is based on maintaining the product value to their customers once it has been purchased (Jia, 2018).
In secondary or supporting activities, procurement is what a business does to get resources which requires to operates such as getting vendors, negotiating best prices etc. Human resource management is related to the how a company hire, trained, motivate and retained employees because people are the important source of value creation within an organisation (Lozano, 2018). Technological development is associated with the processing as well as managing the information and protecting the knowledge base of organisation. The source of value creation are reducing technological cost, technical excellence and advancement. Whereas, infrastructure allows to maintain daily operations legal, administrative etc. are essential infrastructure for the company.
Unilever is termed as a British-Dutch company which deals in the transnational consumer goods industry and headquartered in London, UK. The company was founded in 1929 by the merger of Dutch producer Margarine Unie and British soap-maker Lever Brothers and they operates their operations across worldwide. The company mainly deals into four divisions such as foods, home care, refreshment and beauty & personal care and it is a Europe's seventh most valuable company. It is also known as a oldest multinational company which serves their products in approx 190 countries. As of the 2019, the total number of employees are 155000 who employed in the company Unilever (Unilever, 2020). The core values of company is based on the responsibility, integrity, pioneering and respect etc. As the company is one of the leading consumer goods company in entire world that making as well as selling around 400 brands in approx 190 countries. The mission statement of Unilever is to add vitality to life and it works towards the health and well being of the society in order to increase the livelihoods of people. The company operates globally so the value chain model is required to analyse the company's requirements in order to provide value to their customers and gain high level of satisfaction with loyalty. This will help in analysing the internal environment of an organisation especially the process of conversion their inputs into final outputs which are sold to their users within the market.
Internal business environment consists with the processes, activities, resources, systems, human resources, structure, planning as well as practices which impacts on the company's performance. For analysing the internal environment businesses use Porter's value chain model which was developed in 1985 by the Michael porter. It is a set of several activities which a company carried out in order to create some vale for their customers (Murni, 2018). This tool helps in identifying the sources of value creation for their organisation and these activities are performed in order to determine the cost which affects the profit margin of company. The implementation of value chain model framework is to analyse the significance of functions and activities as per the role of goods and services delivery procedure. It is essential to Unilever to realise the performance of activities and porter's divided this model into two category which is primary and support. The primary activities of Unilever's are includes in manufacturing and selling goods to their target market. Analysis of primary activities can assist in increasing the performance of Unilever's as there are mainly 5 elements in primary activities such as inbound logistics, operations, outbound logistics, marketing and sales as well as services.
In this, inbound logistic helps in maintaining strong relations with their suppliers and necessary to receive, store and distribute goods. As without this Unilever can suffer from issues in their product development phase. Operations is essential for examining the operational functions at a time of getting raw material and the company Unilever is ready to proceed material into finished goods in order to launch in a marketplace (Porter, 2019). It helps in increasing the productivity of company, ensures the competitive success of Unilever as well as improve the efficiency level. Outbound logistics refers to that function through which goods are delivered to the customers as it includes material handling, warehousing, order processing etc. Unilever can optimise this activity in order to explore the sources of competitive advantages as well as achieve growth objectives of business. In marketing and sales activity, Unilever will display benefits and differentiation factors of their offered products to their customers in order to differentiate themselves with their competitors which includes pricing, advertising, sales force, promotional tool and so on. Services includes pre sales and post sales which is provided by the Unilever which leads in increasing the loyalty of users towards their brand value. The company must require to avoid damaged reputation of firm by analysing its support activities and use appropriate tool in order to spread positive word of mouth due to the efficient 3and quickly support services.
In addition, secondary or support activities plays a crucial role in coordinating as well as facilitating the activities of primary value chain. Firm infrastructure refers to a wide range of activities like quality management, financing, strategic planning and management and so on that can allow Unilever to optimise the value of entire value chain and facilitate strengthen their competitive position (Schmidtke, 2018). Human resource management, the company Unilever can identified them by examining the several aspects such as recruitment, selection, training and so on. Effective HRM can allow company to minimise competitive pressure from their workforce. Technology development means most of the activities are based on the support of advanced technologies in production, marketing, sales etc. as the company Unilever requires to know about the significance of technological development. For example, automation software, product design research, technology-supported customer service as well as data analyst. But in this category the research & development department of Unilever's is considered. Procurement is the process of buying raw materials or inputs that may consists from supplies, machinery, equipments, raw materials etc. that are essential for producing a final output as a finished goods. As Unilever's should consider this carefully in order to optimise the inbound, operational and outbound value chain.
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Reflection on the usefulness of value chain model
Value chain analysis helps in knowing that how a company adds value to something and how it can sell their products and services by adding some value to them and generate huge margin of profitability. This is very flexible tool which is used for strategic management of an organisation and it can be used by Unilever in order to diagnose and create competitive advantages on the basis of cost and differentiation to gain a competitive advantages (Wang, 2018). Value chain model helps in knowing about the challenges of businesses which includes the promise of making commitments as well as promises of customer value as it provides more attention on those activities which are required to deliver the value propositions to their customers.
Within the context of Unilever, there are several uses and benefits of value chain analysis such as: It helps in analysing the sources of competitive advantages as business is a combined sets of various activities which share some kind of relatedness between them at a great extent. Whereas, Unilever can not trade entire activities in external marketplace so the approach of value chain suggests that company can consider all activities as a source of economic rent. These activities can results in creates barriers for the new entrants as well as create disadvantages of cost for their rivals in the market. It also assists in examining the complex sets of inter-relationships as well as interdependencies as Unilever can analyse many links among activities internally and externally through the lens of value chain model. Internal alignment refers to the insiders relations among activities and external linkages means relatedness with other organisation. So the analysis of these inter-relationships can helps Unilever in order to take advantages from the joint optimisation as well as better coordination.
In addition, value chain model helps in increasing the flow of information as it can help Unilever to define and exploit many new opportunities as well as minimise external threats. If company do continuous evaluation of value chain then they can results in filling the gap in order to manage the flow of information within the time frame which may impact on the company's productivity and profitability. It also aids in improving the flow of material as the company Unilever can raise flow of raw materials and final products due to the appropriate sales prediction as well as increased demand (Sari, 2018). The management of inventory increase as the company can reduces their delays by tracking all activities throughout the effective supply chain. In addition, the value chain model helps in raising the flow of finances also as the customers of modern era placed huge significance on quick responses as well as convenient access towards the products or services related to the information. Whereas the unpredicted disruption within the flow of information can impacts directly on the relationship of customer-supplier. The value chain model analysis of Unilever and its implementation can shows as well as minimise the bottlenecks of their informational flow which results in effective financial planning and expenditures.
It has been summarised from the above assignment that to create some value for their customers every company requires to analyse their internal business environment effectively which helps in identifying the sources and benefits of value creation. In order to know about the impacts of internal environmental factors a company must need to evaluate and implement porter's value chain model that helps in analysing the entire elements which creates some value and helps in providing value propositions. In addition, the company needs to know about the uses and benefits of value chain model within the organisational flows of material, information as well as finance.
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