Case Western Cabinets - Building a Cabinet or Building a Transformation

Read the case Western Cabinets - Building a Cabinet or Building a Transformation? Complete the following requirements.

Required:

a) Reformat the value chain for Western Cabinets into Porter's value chain format described in Lesson 3 Note 1 (See Below). Under each primary and secondary activity list the activities as Western Cabinets and identify value creating processes. (15 marks)

b) Identify the key cost drivers and suggestions for competitive advantage for Western Cabinets. This will include areas of advantage they currently hold and areas where they could create competitive advantage. (15 marks)

Note:When answering this question, you can refer to parts 1 and 3 of the StrongBrit case in Lesson 3 to see how they formatted both the value chain and the key cost drivers/suggestions for competitive advantage.

Question 1 (30 marks)
Read the case Western Cabinets – Building a Cabinet or Building a Transformation? Complete the
following requirements.
REQUIRED:
a) Reformat the value chain for Western Cabinets into Porter’s value chain format described in
Lesson 3 Note 1 (See Below). Under each primary and secondary activity list the activities as
Western Cabinets and identify value creating processes. (15 marks)
b) Identify the key cost drivers and suggestions for competitive advantage for Western Cabinets.
This will include areas of advantage they currently hold and areas where they could create
competitive advantage. (15 marks)
Note: When answering this question, you can refer to parts 1 and 3 of the StrongBrit case in Lesson 3 to
see how they formatted both the value chain and the key cost drivers/suggestions for competitive
advantage. Lesson 3: Environmental Scanning (Internal Analysis of Value Chain)
Note 1: Porter’s Value Chain
Porter (1985) introduced the concept of a value chain to analyze the firm, its competitors, and the
potential for competitive advantage. The value chain represents a firm's collection of activities to design,
produce, market, deliver, and support a product or service. Michael Porter first discussed the notion of
company or internal value chains in his influential 1980 text Competitive Strategy. He envisioned the
process of producing a product (good or service) as a number of steps (supported by staff activities) that
an organization undertook to add features that the customer valued. Porter argued that as goods moved
through a sequence of activities, those activities added value to the work in process—hence the notion
of a value chain and value-adding activities.
Figure 3.1: Porter’s Value Chain (1980) Adapted from Porter (2001).
Value chain analysis considers each step or activity in the value chain and evaluates the cost of that
activity as well as the value it adds from the customer’s perspective. The value added by the activity is
estimated by the increment in price that the customer is willing to pay because of what the activity adds
to the product. For example, what is the value added to a vehicle by an enhanced system to eliminate
wind noise, in relation to the cost of the system?
You can see from Figure 3.1 above that Porter has divided the value chain into two broad groups—
primary activities that focus on the physical actions required to produce the product, and support
activities that provide organizational support to the primary activities. Note that the value chain must be
aligned with, and therefore reflect, the organization’s chosen strategy.
More recently, strategists have applied the value chain concept to the activities undertaken across a
number of organizations to deliver the final product (good or service) to a customer—this has come to
be called an industry value chain. As the value chain concept was originally conceived, organizations
were to gain a competitive advantage by increasing the value to their target customers through unique
value-adding activities in the organization’s internal chain. However, Porter argued that competitors
could easily duplicate improvements in individual value chain activities. Therefore, the key to creating a
sustainable competitive advantage is through designing an entire value chain that one’s competitors
would find difficult to copy.