Question

Choose a Kuwaiti firm.

- Conduct a value chain analysis of the activities of the chosen firm. Select five activities.

- Explain how each of the five activities contributes to add value to the final product, and then creating value to customers.

Answer 1

Danah Al-Safat Foodstuff Company, Kuwait.

Danah Al Safat Foodstuff Co. KSC engages in the food and beverage industry. It operates through the following business segments: Investment Management, Restaurant and Catering, Fishing Operations, and Ice Cream and Dairy Products. The Investment Management segment is responsible for investing surplus funds in portfolios to maximize yield, incorporating or acquiring subsidiaries and associates, and maintaining adequate capital requirement for the group. The Restaurant and Catering segment involves in establishing and managing restaurants and cafeterias in Kuwait and abroad. The Fishing Operations segment includes catching fish, shrimps, and related seafood products and processing, marketing, manufacturing, and distributing seafood products. The Ice Cream and Dairy Products segment activity covers manufacturing and selling of ice-cream and dairy products. The company was founded on January 18, 1972 and is headquartered in Kuwait City.

Advantages of conducting Value Chain Analysis of the Danah Al Safat Foodstuff Company.

· Identify competitive advantage sources

By conducting the Value Chain Analysis of the company during the planning process, possible sources of competitive advantage can be identified. The company is a collection of different activities that share relatedness to some extent. Danah Al Safat Foodstuff Company cannot trade all activities in the external market. The Value Chain approach suggests that a company can consider these activities as economic rent sources. These activities can also act as barriers to new entrants or cause cost disadvantages to competitors.

· Identify complex inter-relationships and interdependencies

Danah Al Safat Foodstuff Company can identify various internal and external linkages among activities through the value chain lens. The internal linkages are- interrelationships between activities within same organisational units and external linkages are between business units of same or different firms. Studying these interrelationships can help a company take benefit from coordination and joint optimisation.

· Improved flow of materials, information and finances

The use of Value Chain Analysis can optimise the finances, products and information flow.

• The improved information flow can help the company identify and exploit new opportunities and reduce external threats. The continuous Value Chain evaluation can result in timely filling important gaps that may affect a firm's productivity.
• The effective implementation of the Value Chain Analysis of the company can improve the material and product flow due to improved demand and sales forecasting. The inventory management also improves as Danah Al Safat Foodstuff Company can minimise the delays by tracking activities throughout the supply chain.
• Modern customers place high importance to the quick response and convenient access to the important product related information. The unexpected interruption in the information flow can affect the customer-supplier relationship. Danah Al Safat Foodstuff Company Value Chain Analysis and its implementation can highlight and remove the bottlenecks to the information flow.

· Formulate effective firm-specific strategies

Danah Al Safat Foodstuff Company Value Chain Analysis can be used in the competitive strategic decision-making process. However, choosing the right competitive strategy (cost leadership, differentiation or focus) requires knowledge of own and rivals’ cost structure.

Challenges associated with Value Chain Analysis of The Danah Al Safat Foodstuff Company.

• The company may lose its vision and overall strategy by dividing operations into different activities.
• Dividing the operations into primary and support activities may not be separable due to increased complexity.
• The division process can be time consuming and finding the required information can also be difficult.
• Effective value chain implementation does not only require familiarity but detailed expertise.
• The Food and Beverage Industry may find it difficult to get required information if its Business Information System is not structured accordingly.

The Danah Al Safat Foodstuff Company value chain analysis of the activities

The value chain activities of “ Danah Al Safat Foodstuff Company” are directly involved in producing and selling the product to targeted customers. Analysis of value chain activities can improve the performance of Danah Al Safat Foodstuff Company is as explained below.

Inbound Logistics

It is important to develop strong relationships with suppliers as their support is necessary to receive, store and distribute the product. Without analysing the in-bound logistics, Danah Al Safat Foodstuff Company can face various challenges in product development phases. Analysis of in-bound logistics requires a company to focus on every aspect of transformation from raw material to finished product. Some examples of inbound logistics are retrieving raw material, storing the inputs and internally distributing the raw material and components to start production.

Operations

The importance of analysing operational activities raises when raw material arrives, and The Food and Beverage Industry is ready to process the raw material into the end product and launch it in the market. Some examples of operational activities are machining, packing, assembling and testing. Equipment repair and maintenance also falls into this category.

It includes both- manufacturing and service operations. Analysis of operational activities is important for improving productivity, maximising the efficiency and ensuring the competitive success of the company. The increased productivity can help Danah Al Safat Foodstuff Company is to achieve consistent economic growth, increase profitability and set a powerful basis for competitive advantage.

Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer by passing through different intermediaries. Some outbound logistics activities are material handling, warehousing, scheduling, order processing, transporting and delivering to the destination. The company can analyse and optimise the outbound logistics to explore competitive advantage sources and achieve its business growth objectives.

Because, when outbound activities are timely managed with optimal costs and product delivery processes put a minimum negative effect on the quality, it maximises the customer satisfaction and increases growth opportunities for the firm. Danah Al Safat Foodstuff Company should pay specific importance to its outbound value chain activities when its offered products are perishable and require quick delivery to the end customer.

Marketing and Sales

At this stage, company will highlight the benefits and differentiation points of offered products to persuade the customers that its offering is better than competitors. Only producing a high quality product at affordable costs and distinctive features cannot create value until Danah Al Safat Foodstuff Company invests on the marketing and sales activities. The sales agents and marketers play an important role here.

Some examples of The company marketing and sales activities are- sales force, advertising, promotional activities, pricing, channel selection, quoting and building relations with channel members. The company can use the marketing funnel approach to structure its marketing and sales activities. The marketing strategies can either be push or pull in nature, depending on the company’s business objectives, brand image, competitive dynamics and current standing in the market.

Effective and wisely integrated marketing activities can develop the brand equity of the company and help it stand out from the competition. However, Danah Al Safat Foodstuff Company must avoid making false commitments about product features that cannot be fulfilled by the production department. It indicates the need to ensure coordination between different value chain activities.

Services

The pre-sale and post-sale services offered by the company will play an important role in developing customer loyalty. The modern customers consider post-sale services as important as marketing and promotional activities. The power of negative e-WOM due to poor support service cannot be undermined in the current technologically advanced era. The company must analyse its support activities to avoid damaging brand reputation, and instead use it as a tool to spread positive word of mouth due to quick, timely and efficient support services.

Activities that contributes to add value to the final product as well as customers are:

1.   Level Up Your Customer Service

· Check in with your customers from time to time to see how your customers are doing and if they’re enjoying their purchase.

· Let your servers taste your most popular dishes and observe how they’re prepared, so they can give genuine recommendations to your customers, which don’t sound scripted, especially when your employees are upselling other items on your menu.

· Process payment in a timely manner, so you don’t make your customers wait too long, and so that you can increase table turnover rate.

· Loyal/repeat customers tend to spend more than new customers. So it’s important to nurture a relationship with your loyal/repeat customers.

2. Add Healthier Options To Your Menu

Healthy food is especially popular now, what with all the major healthy food diet trends we’re seeing recently.

People are more health conscious nowadays, so your menu should be too.

· include or increase vegetarian and gluten-free options;

· or even add something as simple as yummy toast to your menu.

There are a ton of things you can do to make your menu healthier for your customers!

3. Get Into Branding And Social Media

A generic F&B business just won’t cut it nowadays. Stand out by branding your business and your menu, and by staying active on social media. Create some localised recipes with catchy names and remember to post nice pictures of your creations online.

Tips for branding and creating a strong social media presence for business:

· Post regular updates on Instagram and Facebook (at least 3 times a week).

· When taking photos of your food/drinks/etc., face the camera away from a natural source of light so your image will have enough exposure to look nice and bright.

· Never use Comic Sans font for any of your designs, unless it’s catered to kids and babies.

· Design your store based on your menu and target audience

4. Provide Special Offers To Entice Customers Into Coming Back For More

People like free stuff, so use that to get them to come back again and again and again!

You can also tap into a new market by forming a partnership with another business.

Another idea would be to participate in local events such as food bazaars, mainly to get your name out there. Special occasion or timely offers are also a great way to get more customers.

Increase your sales during festive seasons with special offers or even special custom menu items

5. Make Waiting Time Less Painful

Unfortunately for customers, waiting is part of the F&B business. Long waiting times can ultimately hurt your business. Customers who are tired of waiting will probably leave your brand for your competitors. They might even leave a bad review online. And worst of all, they may never come back. Speed of service is vital for any F&B business. While you can’t reduce waiting time to an absolute zero, you can reduce waiting time or even optimise waiting time for your customers.