Valuation and Financial Statement Analysis †MyAssignmenthelp.com

Question: Discuss about the Valuation and Financial Statement Analysis. Answer: Introduction The report intends to project a clear picture of Porters value chain management and its application. Porters value chain is an important tool that is used by most of the business organization at any given time. The objectives of the report are to uncover the key facets of Porters value chain management. The report will cover all the details of Porters value chain starting from its definition till its application. The report also covers the functional quality of the strategic management tool. Apart from that the advantages and the disadvantages of using Porters value chain as a strategic management tool are also discussed in the report. In order to understand in detail the application or Porters value chain, Landmark group has been taken as an example. The phrase Porters Value Chain Analysis brings forefront about a simple question; that is how does organization creates values and what are values for an organization. In order to put it simple, the processes and the methods that are undertaken by the management and the officials of any organization to change the inputs of the company into outputs in a fashion that the total cost spent on processing the inputs are lower than the processed output (Miles 2015). This very process according to which the marginal price of processing the inputs are kept lower than the final price of processed outputs makes all the difference. This process is not just a question but holds the fundamental importance that focuses in the economic trajectory of a company. The economic trajectory in correspondence implies the reason that a company is held in the first, middle or lower sections (Palandeng et al., 2018). However, the process of creating values is not that simple. At the very first hand, values are created by retailers in the way raw materials are collected from different sources and suppliers and turning the raw materials into usable products and services. The sections related to distribution of products and services are taken care of by the retailers. That is the retailers ensure that the products are well packed and are available to the customers. The selling price of the products holds the value of the company. Put in a simpler form, The value that is created by the company total cist incurred for creating the value = the marginal profit of a company (Grant 2016). Creating value benefits a company in myriad ways. When the value that is created by the companies are more, the marginal profit also tends to be on the higher side. The added advantage is the competitive edge that a company builds (Schmidlin 2014). Porters value chain is a measuring tool that was invented ad developed by Michael Porter, of Harvard Business School. Porter defined vale chain as the chain of activities are related to an organization in creating values to the company. That is the chain of processes like designing, producing, marketing, delivering and performing the supportive tasks for products and services can be termed as Porters value chain (Rothaermel 2015). Value chain takes into consideration the very initial of the processes, that is collecting raw materials till the sales of the end product. Value chain can majorly be divided into two categories. According to Porter, value chain consists of primary and secondary activities where primary activities are chiefly concentrated in the operations department, distribution of products and services and sales. The secondary activities are also known as support activities which takes into consideration human resource department. Need and purpose of porters value chain Companies to identify the opportunities that are related to secured cost advantages chiefly use Porters value chain. Companies and organizations also use Porters value chain to identify the opportunities in the context of creation of new products and services and create a difference from all the other existing products in the market (Porter and Kramer 2019). The figure attached below shows the various sections of Porters value chain and the process in which it works. The primary activities of Porters value chain creates the product, maintains the logistics, transfers the products from warehouse to the retail stores and sells. Put in simpler form, it maintains the Inbound logistics Outbound logistics Operations Sales and marketing Service and support The secondary or the supportive activities consists of human resource department, departments related to technological development and procurement Merits of Porters value chain Porters value chain is a strategic tool that is imperative to any business organization. It particularly helps in the identification of the competitors of a specific business. Apart from that it also helps to analyze the strategies that are followed by the rival companies that are responsible for flourishing them. Porters value chain is a flexible tool that can be used tactfully by the management and the officials of a company to diagnose and invent competitive advantages on the factors of cost and differentiation (Christopher 2016). Companies and organizations can use Porters value chain in order to understand the different issues faced by the employees to keep up with the promises of commitments related to value products for the customers. It particularly helps to draw the focus towards the processes and methods that needs to be undertaken so that the proposed values to the customers can be fulfilled. Though, SWOT analysis provides any company with an insight about the threats, weakness, strengths and opportunities. Yet, Porters value chain analysis can be used to compare the business model of a particular company with the other models that are followed by other companies to have a clear insight about the weakness and the strengths of the other companies. The former company to draw advantages can use the strength and weaknesses of the rival companies, thus acquired (Ayers and Odegaard 2017). Porters value chain and its advantages are yet not over. For its advantages in business context, it is being taught in almost all the business schools for the last twenty to twenty-five years. Weaknesses of Porters Value chain Similar to all other tools, Porters value chain also her certain demerits or disadvantages. The major disadvantages of using Porters value chain are listed below Since Porters value chain is a model that is flexible enough, its flexibility results in using the tool to a particular context. Business and its situations are susceptible to change. Porters value chain cannot take hold of the changing scenarios in business. Porters value chain can work at its best when the tool is applied to manufacturing business. Not all sections of business can make the best use of Porters value chain since the concept as held in Michael Porters boob Competitive Advantage talks about the system in the context of manufacturing industries (De Marchi, Di Maria and Gereffi 2017). Porters value chain is a complex strategic tool. That is, in order to make a proper analysis it may take a lot of time for organizations. Moreover, it must be understood that the scale and scope of Porters value chain may take a large amount of time if done correctly. However, once done it will be able to focus on the key strategies that are used by rival companies in order to succeed. Porters value chain is a concept that is known by all. The difficult part is the way one uses it. Its usage is uncommon and a very few holds expertise in it. Thus while hiring experts companies need to be sure that the employee have a background experience and can make the proper use of value chain. It is a sensitive tool and if not operated in proper manner, the company may face loss. At times, there are risks that the company would be taken into wrong directions as well. Adaption of the concept of value chain on one hand while it has increased the chances of identifying the strategies that are used by rival companies and helped to spot the rival companies. On the other hand it has also significantly reduced the crave for innovation, understanding and creating competitive advantage for companies. The more it is potent in identifying the rivals and the competitive strategies used by rivals, the more these companies are de-motivated of innovating techniques since it feels the techniques will be spot by Porters value chain. However, another interesting facet of porters value chain is that due to that that it is capable for identifying strategies and rivals, new information technology firms are using business information systems that are secured. That is, Porters value chain will be unable to identify the competitive strategies that are used by these rival companies since the system will be locked and secured. Application of Porters value chain In order to understand the application of Porters value chain, a company can be taken as an example. Landmark group is the company that has been chosen in this context. Application of Porters value chain in Landmark group will help to draw a clear picture about the process and work of Porters value chain. Landmark group is one of the largest retail chains in Oman. It also operates in Middle East, Africa and India. Founded in 1973 by Micky Jagtiani, apart from retail business it also holds expertise in hospitality and loyalty business. Some of the most popular international brands that the retail sectors of Landmark group deals with are babyshop, Splash, SHOEMART, centrepoint, iconic. Homecentre, shoeexpress, lifestyle and many more. The key strengths of the company lies in the fact that the employees of the industry are talented, the operations are done with efficiency and logistics are emphasized upon. Landmark group is the proud employer of approximately fifty five thousand employees across the world and have a total of fifty seven brands in its retail stores. It also have approximately two thousand three hundred company outlets or retail stores and has a retail space of thirty million square feet. From the measures it is self assertive about the royalty of the gigantic organization . The organization operates chiefly in twenty two countries across the globe. The company has reputation good enough across Middle East, Africa and Indian subcontinent. The main products that the company deals with are Apparels, footwear, consumer electronics, home improvement, furniture, hotels, E-commerce, healthcare and malls. The gross revenue that has been recorded in the year 2016 is of US $6 Billion. The Landmark group is mainly focused in MENA region. It has its headquarters in Dubai, United Arab Emirates. The success of Landmark have been skillfully handcrafted by its founder Micky Jagtiani and his wife, the CEO and chairwoman of Landmark group Renuka Jagtiani. Renuka Jagtiani has made major contribution in the context of expansion of Landmark group. She was the lead of strategic plan for expansion of the business overseas, launching the franchise divisions of the company and initiating e-commerce platform for the same. The main driving force behind the CSR objectives of the company is also her. Having analyzed the prospects and the success of the gigantic organization, a deeper delve towards the working process can be made. Applying Porters value chain in Landmark group it can be asserted that the company applies the tool in apt manner to look for an competitive edge (Porter and Heppelmann 2015). Primary activities of Landmark group: Owing to the space and strength of the organization, it is well understood that the suppliers of the company are scattered in more or less all geographical locations. The suppliers of landmark are the most important contributors to the company, since it is only because of the suppliers that the company has been able to keep its price lower as compared to the competitors in the market. Given the fact that, it buys raw materials in large quantities the prices are affordable (Johnson 2016). As such, managing prices are not difficult. More or less the company holds good bargaining power in this context. Apart from that since Landmark group buys a lot of quantity the prices are taken in wholesale basis. Landmark has successfully strived through and makes implementation of the strategies related to inventory management and supply chain management. This way the company has been able to manage successfully its supply chain costs. Not only the company has mastered the art of implementing stra tegies related to supply chain management and inventory management but at the same time, it also makes an appropriate use of the technology. Landmark group has equally potent sales in mobile apps and other e-commerce portals. The company has been able to keep with excellent logistics due to which the suppliers deliver raw materials in time as per the requirement. Since the delivery is made in time, the costs are also low. There are certain code of conduct that are applicable for the suppliers of Landmark group. In order to keep the prices low and to maintain the lowered prices, the company aims at establishing long-term professional relationship with the suppliers. Apart from that long term relationship also helps the company to offer the suppliers with the potential for high volume purchases (Johnson 2016). Lastly, it can be said that Landmark group has been able to manage its supply chain through the maintenance of the strategic partnership with its suppliers across the globe (Porter and Heppelmann 2014). As already known, Landmark operates chiefly in retail sector. It is also one of the largest leading retailer chains across the globe. At present, it has been seen that Landmark operates in 22 different countries and has a total of 2300 retail outlets with more than fifty brands working under it. It has a total of 44 years of experience until 2018. Out of the total brands the company has 27 in house brands and the rest 30 brands are franchised (landmarkretailgroup.com). Landmark started its initial business as a single store in 1973 in Bahrain. It employs 55,000 people worldwide (landmarkretailgroup.com). Cross docking is an interesting concept that is used by Landmark that refers to the technique of wrapping up the process of supply chain with inventory management. Landmark does not directly supplies the products and the materials as it receives from suppliers. All the products that are received from the suppliers are cross-checked or cross docked by the company before forwarding the same to the retail stores. Maintenance of this process turns beneficial for the company as it keeps the transportation costs low and the fixes the total time taken in the entire process. This in turns helps the company by always having enough and adequate stock of goods in the stores. The chances of unavailability of goods are less and the stores are replenished from time to time. While all these factors taken together are beneficial to the company and makes a significant difference in its overall production cost, it also passes the same advantage to its customers. That is, if the production costs are kept low the company offers more discounts and offers. This not only fetches more customers towards the company but also at the same time benefits the customers as well. It significantly strengthens the base of loyal customers of the company. Landmark at present owns more than 120 distribution centers (landmarkretailgroup.com). Marketing and sales It is the excellent marketing that the Landmark group does that fixes the pricing of the products of the company. Pricing strategy is one of the ruling factors of the company. The intermittent discounts, offers like buy one get one, Landmark cash benefits, prime member benefits are the most important marketing plans that helps to attract the customers by keeping the prices low (Rodriguez, Peterson and Ajjan 2015). There is no iota of doubt that Landmark group in its marketing and promoting of new brands and products spends more than billions. Perhaps the marketing strategy not only generates its revenue in time but also simultaneously fetches the company more than half of its profit. Another interesting factor is the way the company gets its products and services promoted in the market. Landmark group follows some of the most interesting and successful branding strategies that help the company to attract customers from all round the globe. More the customers are attracted the company is more opportune with chances to impress the customers (Wang, Gupta and Grewal 2017). Thus, the company gets the base of its loyal customers. Also, the base of loyal customers increases with the passage of time. The company carries on practices like traditional methods of advertising like banners, hording and bill boards. Apart from that, the company also makes the use of social networking sites as an important platform for advertising and promoting its new launches. Landmark group has also created its own official page on different social networking sites like facebook, instagram and twitter. Landmark group also customizes its advertisements. That is, in the creative advertisements that are developed by the company the happy reviews of the customers are incorporated. This induces an urge to pay the landmark group stores a visit among the other customers. Once customers visit the stores, the sales personals and their sense of hospitality leaves the customers in awe (Cometto et al. 2016). Apart from that the company maintains the quality of the products and also offers discounts. As such, landmark group ensures that all the customers revisits the store once visited. Closely connected to its brand and advertisement strategy are its customer service sections. Customer service sections are an integral part of branding and marketing in Landmark group. Since happy and satisfied customers are the only way the company can raise its standards high, it always maintains that customers should be given utmost priority. This is exactly what is done by the company. The customers advise and feedback are noted down intermittently. The managers and the officials also follows up the customers and enquires if they are happy about the services of goods and products at present. Not every time the customers replies with positive comments. It has been noticed that many times the customers revert back with negative feedbacks. Such cases are taken in optimistic manner by the staffs in the company. Landmark group feels that complaints and negative feedbacks are the only way to probe into the loopholes that the company has (Cometto et al. 2016). Negative feedback provides the company with golden opportunities to look into the matter and het the issue solve. Thus, a proper management of customer service section helps the company to serve the customers better. On the other hand, the customers also feels valued and important from the end of the company. Updated and advanced technology is used in all the sectors of the company starting from the supply chain management, sales and customers service. Mobile applications are used for online marketing whereas the managers and officials staffs to keep them updated about the changing scenario use other technological tools (Hendricks et al. 2015). Technology is an indispensible part of modern marketing. Human resource management During the initial period of its journey, Landmark group did not have enough potential of man power to expand its business overseas (El, Jamali and Harwood 2016). Apart from that since it was new in the market, the employees of the company were also not paid well. However, the company at the present proudly employs around 55,000 employees all over the world. Apart from satisfying the customers, the company has also been able to satisfy its employees too (Gereffi and Fernandez-Stark 2016). The company has also shown significantly good employee retention rates. No wonder that the gigantic organization that Landmark group is strongly focuses on its procurement. In order to keep its final prices low and to throw out intermittent sales and discount offers, it is imperative for the company to buy the raw materials in lowest possible prices. Of course the company maintains the quality. From its regular suppliers, Landmark group buy products that are rich in quality. Since the amount is bought in bulk, suppliers and the company manage the prices by meeting into a common price range. By the term infrastructure, it is not only meant the interior and the store spaces. It also refers to the organizational structure within the company. Owing to the gigantic structure of the company, there is no iota of doubt that the prevailing organizational structure would also be great and deep. Yet, the management structures it well enough so that all the departments are maintained. All the departments also works in coordination. Conclusion Towards the end it can thus be concluded that Porters value chain is an essential marketing tool that are being used by most of the business organizations. It not only helps in identifying the rival companies but also helps in understanding the strategies that are used by the companies. The managers and the officials can use the tool to further innovate plans regarding marketing and sales and stay competitive in the market. Recommendations: The competitive strategies identified by the managers can be altered and modified to be used in Landmark group. The customer service department can keep a check if online customers are satisfied with online purchases. Reference List Ayers, J.B. and Odegaard, M.A., 2017.Retail supply chain management. CRC Press. Basu, R., 2017.Managing project supply chains. Routledge. Bedeley, R.T., Ghoshal, T., Iyer, L.S. and Bhadury, J., 2018. Business analytics and organizational value chains: a relational mapping.Journal of Computer Information Systems,58(2), pp.151-161. Chen, D.Q., Preston, D.S. and Swink, M., 2015. How the use of big data analytics affects value creation in supply chain management.Journal of Management Information Systems,32(4), pp.4-39. Christopher, M., 2016.Logistics supply chain management. Pearson UK. Cometto, T., Le Meunier-FitzHugh, K., Labadie, G.J. and Roux, F., 2016. The Role of Sales and Marketing in Innovation Implementation, an Empirical Analysis in Six South American Countries. InMarketing Challenges in a Turbulent Business Environment(pp. 649-650). Springer, Cham. De Marchi, V., Di Maria, E. and Gereffi, G., 2017. Industrial districts, clusters and global value chains: toward an integrated framework. InLocal Clusters in Global Value Chains(pp. 15-32). Routledge. El Dirani, A., Jamali, D. and Harwood, I., 2016. Strategic human resource management: enablers and challenges of pursuing the CSR agenda. Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer. Grant, R.M., 2016.Contemporary strategy analysis: Text and cases edition. John Wiley Sons. Hendricks, D.J., Sampson, E., Rumrill, P., Leopold, A., Elias, E., Jacobs, K., Nardone, A., Scherer, M. and Stauffer, C., 2015. Activities and interim outcomes of a multi-site development project to promote cognitive support technology use and employment success among postsecondary students with traumatic brain injuries.NeuroRehabilitation,37(3), pp.449-458. https://landmarkretailgroup.com Johnson, G., 2016.Exploring strategy: text and cases. Pearson Education. Miles, L.D., 2015.Techniques of value analysis and engineering. Miles Value Foundation. Palandeng, D.I., Kindangen, P., Timbel, A. and Massie, J., 2018. Influence Analysis of Supply Chain Management and Supply Chain Flexibility to Competitive Advantage and Impact on Company Performance of Fish Processing in Bitung City.Journal of Research in Business, Economics and Management,(10),1, pp.1783-1802. Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition.Harvard Business Review,92(11), pp.64-88. Porter, M.E. and Heppelmann, J.E., 2015. How smart, connected products are transforming companies.Harvard Business Review,93(10), pp.96-114. Porter, M.E. and Kramer, M.R., 2019. Creating shared value. InManaging Sustainable Business(pp. 327-350). Springer, Dordrecht. Rodriguez, M., Peterson, R.M. and Ajjan, H., 2015. CRM/social media technology: impact on customer orientation process and organizational sales performance. InIdeas in Marketing: Finding the New and Polishing the Old(pp. 636-638). Springer, Cham. Rothaermel, F.T., 2015.Strategic management. McGraw-Hill Education. Schmidlin, N., 2014.The Art of Company Valuation and Financial Statement Analysis: A Value Investor's Guide with Real-life Case Studies. John Wiley Sons. Wang, R., Gupta, A. and Grewal, R., 2017. Mobility of top marketing and sales executives in business-to-business markets: a social network perspective.Journal of Marketing Research,54(4), pp.650-670.