Value Chain Anlalysis

Role of Organisation in Value Chain:

We will try to understand the role of organisation structure in the Modern Corporation with the help of value chain analysis.

Li and Fung group:

The maximum value addition in Li and Fung is towards the middle and end of the value chain. Therefore to enable this it had to be more external looking towards customers end and more inward looking at the processing part. Hence they formed Customer centric divisions which operated in a firm environment and Operations support group, which acted in a typical command type environment.

Sony:

Since the maximum value addition in Sony is towards the End user, it is the Integrated and decentralisation management model which is at the heart of it. The decentralisation empowers the individual business units to work close to the customer and pick the product from the market and integration helps it to exchange information back and forth with HQ and sell under the one brand "Sony". Also the independence from Keiretsu system helped Sony to go global and form business relationships rather than group relationships which is hallmark of Japanese culture.

Kikkoman:

The maximum Value addition in Kikkoman is in the recipe of the product (initial stage of value chain). It can use unskilled local workers as the process does not require high skill or in other words high value addition at operation stage. It also helped them garnering local support in the new community.

Issues:

The issues in organisation structure regarding hierarchical or flat, local policies or HQ policies and rising transactions costs in Emerging countries are highlighted in the above cases. It is clear that the type of organisational structure should complement business strategy or in other