Value chain

A value chain is a set of activities that an organization carries out to create value for its
customers. Porter proposed a general-purpose value chain that companies can use to examine
all of their activities, and see how they're connected. The way in which value chain activities
are performed determines costs and affects profits, so this tool can help you understand the
sources of value for your organization.
Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on
systems, and how inputs are changed into the outputs purchased by consumers. Using this
viewpoint, Porter described a chain of activities common to all businesses, and he divided them
into primary and support activities, as shown below.

Primary Activities

Primary activities relate directly to the physical creation, sale, maintenance and support of a
product or service. They consist of the following:

Inbound logistics – These are all the processes related to receiving, storing, and distributing
inputs internally. Supplier relationships are a key factor in creating value here.

Operations – These are the transformation activities that change inputs into outputs that are
sold to customers. Here, operational systems create value.

Outbound logistics – These activities deliver your product or service to our customer. These
are things like collection, storage, and distribution systems, and they may be internal or external
to our organization.

1
Marketing and sales – These are the processes we use to persuade clients to purchase from
our instead of competitors. The benefits we offer, and how well we communicate them, are
sources of value here.

Service – These are the activities related to maintaining the value of our product or service to
our customers, once it's been purchased.

Support Activities

These activities support the primary functions above. In our diagram, the dotted lines show that
each support, or secondary, activity can play a role in each primary activity. For example,
procurement supports operations with certain activities, but it also supports marketing and sales
with other activities.

Procurement (purchasing) – This is what the organization does to get the resources it needs
to operate. This includes finding vendors and negotiating best prices.

Human resource management – This is how well a company recruits, hires, trains, motivates,
rewards, and retains its workers. People are a significant source of value, so businesses can
create a clear advantage with good HR practices.

Technological development – These activities relate to managing and processing information,

as well as protecting a company's knowledge base. Minimizing information technology costs,
staying current with technological advances, and maintaining technical excellence are sources
of value creation.

Infrastructure – These are a company's support systems, and the functions that allow it to
maintain daily operations. Accounting, legal, administrative, and general management are
examples of necessary infrastructure that businesses can use to their advantage.

Companies use these primary and support activities as "building blocks" to create a valuable
product or service.

Value chain of Serene Grocery Store

Suppliers Serene Grocery Serene Grocery

Online sells
Store 2 Shooper
Serene Grocery Store Value Chain

Suppliers

Vendors are Serene Grocery Store suppliers. They delivery products to Serene Grocery Store.
Serene Grocery Store is able to bargain or the lowest possible price because of the high volume
of sales. Therefore Serene Grocery Store passes these saving to the customers.

Serene Grocery Store

After product are delivered to the stores, they are placed on the appropriate shelf location for
customers to view. Store location is in located in Naxal.

Serene Grocery Store shopper

Customers can purchase product at very low prices and have the ability to return any items.

Online sales

Customer can order the product online through the apps of the store. Free delivery is provided
for the customers.

FINANCIAL PLANE

P&L for year ending for 31-March- 2015

Serene Grocery store

Dr Trading a/c & profit& loss a/c for year ending 31-march-2015 Cr
Particular Rs. Particular Rs.

To opening stock 0 By sales 3836750

To purchase 1590000
To factory electricity 51500
To wages & salaries 220000
To carriage inward 4500 By closing stock 210000
4046750 4046750

3
To carriage outward 150000 By gross profit b/d 2180750
To sundry expenses 5000 By discount 25000
To advertising 900000
To selling & distribution 350000
To travel expenses 3950
To insurance 25000
To interest 300000
To tax & duties 20000
To depreciation 391500

To net profit 60300

2205750 2205750

P&L for year ending for 31-March- 2016

Serene Grocery store

Dr Trading a/c & profit &loss a/c for year ending 31-march-2016 Cr
Particular Rs Particular Rs
To opening stock 210000 By sales 4571320
To purchase 1820000
To factory electricity 61360
To wages & salaries 220000
To carriage inward 5000 By closing stock 230000

To gross profit c/d 2484960

4801320 4801320

To carriage outward 200000 By gross profit b/d 2484960

To sundry expenses 6000 By discount 22000
To advertising 900000
To selling & distribution 355000

4
To travel expenses 5450
To insurance 25000
To interest 300000
To tax & duties 20000
To depreciation 391500

To net profit 304010

2506960 2506960

P&L for year ending for 31-March- 2017

Serene Grocery store

Dr Trading a/c & profit &loss a/c for year ending 31-march-2016 Cr
Particular Rs particular Rs
To opening stock 230000 By sales 5317810
To purchase 2175000
To factory electricity 71380
To wages & salaries 220000
To carriage inward 5500 By closing stock 225000

To gross profit c/d 2840980

5542810 5542810

To carriage outward 210000 By gross profit b/d 2840930

To sundry expenses 8000 By discount 22000
To advertising 900000
To selling & distribution 360000
To travel expenses 6350
To insurance 25000
To interest 300000
To tax & duties 20000

5
 To depreciation 391500

To net profit 640080

2860930 2860930

Resource requirements

Manpower

Function Role Work experience No. of personal

required

Stocking/warehousing Manager 4 + Years 1

field 0 8
Force
R/D Staff 4 + years 2
Administration Staff 1 + years 2