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Asian Paints Ltd International Business Division Value Chain

Analysis
Posted by Taylor Byrne on Sep 23 2018

1.1 Advantages of conducting Value Chain Analysis of Asian Paints Ltd International Business
Division
Value Chain Analysis of Asian Paints Ltd International Business Division can o er various advantages:

1.1.1 Identify competitive advantage sources

By conducting the Value Chain Analysis of Asian Paints Ltd International Business Division during the planning process, possible sources of
competitive advantage can be identi ed. The rm/company is a collection of di erent activities that share relatedness to some extent. Asian
Paints Ltd International Business Division 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.

1.1.2 Identify complex inter-relationships and interdependencies

Asian Paints Ltd International Business Division 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 di erent rms. Studying these interrelationships can help a company take bene t from coordination and joint optimisation.

1.1.3 Improved ow of materials, information and nances

The use of Value Chain Analysis can optimise the nances, products and information ow.

The improved information ow can help the company identify and exploit new opportunities and reduce external threats. The continuous Value
Chain evaluation can result in timely lling important gaps that may a ect a rm's productivity.
The e ective implementation of the Value Chain Analysis of Asian Paints Ltd International Business Division can improve the material and
product ow due to improved demand and sales forecasting. The inventory management also improves as Asian Paints Ltd International
Business Division 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 ow can a ect the customer-supplier relationship. Asian Paints Ltd International Business Division
Value Chain Analysis and its implementation can highlight and remove the bottlenecks to the information ow.

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1.1.4 Formulate e ective rm-speci c strategies

Asian Paints Ltd International Business Division Value Chain Analysis can be used in the competitive strategic decision-making process. However,
choosing the right competitive strategy (cost leadership, di erentiation or focus) requires knowledge of own and rivals’ cost structure.

1.2 Challenges associated with Value Chain Analysis of Asian Paints Ltd International Business
Division
The company may lose its vision and overall strategy by dividing operations into di erent 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 nding the required information can also be di cult.
E ective value chain implementation does not only require familiarity but detailed expertise.
Asian Paints Ltd International Business Division may nd it di cult to get required information if its Business Information System is not
structured accordingly.

2. Porter’s Value Chain Analysis of Asian Paints Ltd International Business

Division
Porter's value chain model is highly popular in the business world. However, Asian Paints Ltd International Business Division must not take it as a
rigid, standalone framework by assigning the equal importance to all activities. The e ective Value Chain Analysis requires Asian Paints Ltd
International Business Division to realise that all activities or functions do not require same scrutiny level. Hence, the rst step of adapting the
Porter Value Chain framework is to identify the importance of activities according to their role in product/service delivery process.

Here is the list of primary value chain activities as proposed by Porter:

2.1 Primary Activities

The primary value chain activities of Asian Paints Ltd International Business Division are directly involved in producing and selling the product to
targeted customers. Analysis of primary value chain activities can improve the performance of Asian Paints Ltd International Business Division as
explained below.

2.1.1 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, Asian Paints Ltd International Business Division 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 nished product. Some
examples of inbound logistics are retrieving raw material, storing the inputs and internally distributing the raw material and components to start
production.

2.1.2 Operations
The importance of analysing operational activities raises when raw material arrives, and Asian Paints Ltd International Business Division 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
e ciency and ensuring the competitive success of Asian Paints Ltd International Business Division. The increased productivity can help Asian
Paints Ltd International Business Division to achieve consistent economic growth, increase pro tability and set a powerful basis for competitive
advantage.

2.1.3 Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer by passing through di erent intermediaries. Some outbound
logistics activities are material handling, warehousing, scheduling, order processing, transporting and delivering to the destination. Asian Paints
Ltd International Business Division 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 e ect on the
quality, it maximises the customer satisfaction and increases growth opportunities for the rm. Asian Paints Ltd International Business Division
should pay speci c importance to its outbound value chain activities when its o ered products are perishable and require quick delivery to the
end customer.
2.1.4 Marketing and Sales
At this stage, Asian Paints Ltd International Business Division will highlight the bene ts and di erentiation points of o ered products to persuade
the customers that its o ering is better than competitors. Only producing a high quality product at a ordable costs and distinctive features
cannot create value until Asian Paints Ltd International Business Division invests on the marketing and sales activities. The sales agents and
marketers play an important role here.

Some examples of Asian Paints Ltd International Business Division's 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 Asian Paints Ltd
International Business Division’s business objectives, brand image, competitive dynamics and current standing in the market.

E ective and wisely integrated marketing activities can develop the brand equity of Asian Paints Ltd International Business Division and help it
stand out from the competition. However, Asian Paints Ltd International Business Division must avoid making false commitments about product
features that cannot be ful lled by the production department. It indicates the need to ensure coordination between di erent value chain
activities.

2.1.5 Services
The pre-sale and post-sale services o ered by the Asian Paints Ltd International Business Division 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 e cient
support services.

2.2 Secondary Activities

The support activities play an important role in coordinating and facilitating the primary value chain activities. Asian Paints Ltd International
Business Division can also bene t from analysis of its support activities as explained below.

2.2.1 Firm infrastructure

The rm infrastructure denotes a range of activities, such as- quality management, legal matters handling, accounting, nancing, planning and
strategic management. E ective infrastructure management can allow Asian Paints Ltd International Business Division to optimise the value of
the whole value chain. Asian Paints Ltd International Business Division can control the infrastructure activities (or commonly called overhead
costs) to strengthen the competitive positioning in the market.

2.2.2 Human resource management

Asian Paints Ltd International Business Division can analyse human resource management by evaluating di erent HR aspects, including-
recruiting, selecting, training, rewarding, performance management and other personnel management activities. The e ective HR management
can allow Asian Paints Ltd International Business Division to reduce competitive pressure based on motivation, commitment and skills of its
workforce. The company can also achieve its cost minimisation objectives by analysing hiring and training costs with their relative return. The
heavy dependence of Asian Paints Ltd International Business Division on employees' talent will increase the importance of this value chain
support activity.

2.2.3 Technology development

In a modern, technological advanced era, almost all value chain activities depend on technological support. The technological integration in
production, distribution, marketing and human resource activities requires Asian Paints Ltd International Business Division to realise the
importance of technology development. It can be divided into product and process technological development activities. Some examples are-
automation software, technology-supported customer service, product design research and data analytics. The research and development
department of Asian Paints Ltd International Business Division is classi ed in this category.

2.2.4 Procurement
The procurement in value chain denotes the processes involved in purchasing the inputs that may range from equipment, machinery, raw
material, supplies, raw material and other items necessary for producing the nished product. Due to its linkage with multiple value chain
activities, Asian Paints Ltd International Business Division should carefully consider its procurement activities to optimise the inbound,
operational and outbound value chain.

As mentioned above, the application of Porter Value Chain model depends on understanding the importance of all activities. After understanding
the relative importance of identi ed value chain activities, Asian Paints Ltd International Business Division should highlight areas where value can
be added, cost e ciency can be achieved, di erentiation basis can be set, or processes can be optimised.
Here is a pictorial presentation of Porter Value Chain model:

3. Competitive Advantages through Value Chain Analysis of Asian Paints

Ltd International Business Division
It is important for Asian Paints Ltd International Business Division to base its competitive advantage on activities in which it has access to the rare
or scare resources. It may include- intellectual capital, assets, skills or distribution network. The Value Chain Analysis can help Asian Paints Ltd
International Business Division identify those activities and develop those areas to get a strong competitive edge over rivals. There are many
examples (like Toshiba and Sharp) that consider Value Chain Analysis as a tool to get a competitive advantage and invest heavily in research and
development activities within their value chain network. Porter’s generic strategies for achieving the competitive advantage and value chain
model can be used together to set strong competitive advantage basis.

Following diagram shows Porter's competitive advantage model:

The analysis of the value chain activities can be done to understand the competitive advantage sources. Asian Paints Ltd International Business
Division can either use the operations, marketing and other relevant value chain activities to avail the cost advantages or it can use the human
resource, technology, infrastructure, service or other relevant activities to set the strong di erentiation basis. Broadly, the competitive advantage
sources can be grouped into two types- cost and di erentiation. Asian Paints Ltd International Business Division can obtain a competitive
advantage from one or both sources, depending on the depth and breadth of its Value Chain Analysis. Next parts of the article present in detail
how Asian Paints Ltd International Business Division can con gure primary and/or secondary value chain activities to achieve the desired cost and
di erentiation objectives.

4. Cost Advantage of Asian Paints Ltd International Business Division

4.1 Cost advantage through Value Chain Analysis of Asian Paints Ltd International Business
Division
Asian Paints Ltd International Business Division can avail the cost advantages by reducing the costs associated with the value chain activities.
However, it requires the company to rstly map the activities and then associate costs to make necessary adjustments. The connection between
the value chain and cost leadership strategy re ects a parallel focus on the low cost operational activities. If Asian Paints Ltd International
Business Division aims to obtain cost advantage, it needs to identify each element within the value chain can be optimised to get the whole e ect

A Value Chain Analysis Example for Asian Paints Ltd International Business Division is that it can use the analysis as a tool to negotiate the best
prices and maximise the in-bound and out-bound transportation processes.
Another Value Chain Analysis Example is using the value chain information to make modest advertising budget that can reduce marketing costs
and o er the product at an a ordable cost.

If Asian Paints Ltd International Business Division aims for the low-cost, the Value Chain Analysis can optimise the pro tability. If product
di erentiation is the aim of Asian Paints Ltd International Business Division, Value Chain Analysis will help the company in maximising the
e ciency and enhancing the product quality by improving processes.

4.2 Cost drivers of Asian Paints Ltd International Business Division Value Chain Analysis
Asian Paints Ltd International Business Division can control following drivers to add value, set di erentiation basis and enhance e ciency.

Organisational policies
Integration
Timing
Economies of scale
Linkages
Interrelationships
Capacity utilisation
Learning and Spillover

However, it is important to note that costs can be reduced only to some extent. Asian Paints Ltd International Business Division Value Chain
Analysis must also consider the customers’ perceived value that may justify the higher price charged by the company compared to competitors.

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5. Company Di erentiation Advantage

Asian Paints Ltd International Business Division can obtain the di erentiation advantage by analysing di erent value chain activities. For instance,
a company can procure the unique and valuable inputs that are not easily available to competitors. Asian Paints Ltd International Business
Division can either recon gure the whole value chain or change individual entities to set the di erentiation basis. The cost drivers (such as timing,
interrelationships, linkages, scaling and integration) can also be altered to develop uniqueness.

Some examples of di erentiation through analysis of value chain are:

Forward integration or backward integration to exercise better control over inputs

Utilisation of new channels of distribution
Implementation of innovative process technologies.

5.1 Di erentiation through primary value chain activities

Asian Paints Ltd International Business Division can individually analyse the primary activities from all aspects and create di erentiation basis by
identifying the following sources:

Inbound logistics: possible di erentiation basis for Asian Paints Ltd International Business Division are:
Procure high quality inputs to o er high quality nished product
E ective incoming input handling to reduce damage
Operations: possible di erentiation basis for Asian Paints Ltd International Business Division are:
Flexible manufacturing system
Wide product range
Improved product appearance
Prevention of product pre-mature failure
Quick response to unique speci cations
Improved customer satisfaction through lower defect rate
Improved product performance due to conformance to technical speci cations
Outbound logistics: possible di erentiation basis for Asian Paints Ltd International Business Division are:
E ective handling and better shipping to reduce product damage
Timely product delivery
Flexible delivery capabilities
E ective order processing procedure
Marketing and sales: possible di erentiation basis for Asian Paints Ltd International Business Division are:
Improved relationships with suppliers and customers
Enhanced communication with customers by o ering high quality information.
Brand awareness, reputation and image development due to extensive and e ective advertising.
E ective coordination among product, research and marketing departments.
Wider sales force coverage.
Services: possible di erentiation basis for Asian Paints Ltd International Business Division are:
Superior service quality
High quality technical assistance
Reliable and quick repair/maintenance service
5.2 Di erentiation through secondary value chain activities
Asian Paints Ltd International Business Division can also analyse the secondary value chain activities to set di erentiation basis:

Firm Infrastructure: Asian Paints Ltd International Business Division can set di erentiation basis through:
Extensive database development for e ective marketing
Advanced information system to get deeper customer insights.
Human Resource Management- Asian Paints Ltd International Business Division can set di erentiation basis through:
Attractive rewards to encourage creativity and maximise productivity
Personnel training for e ective interaction and superior customer service
Technological development- Asian Paints Ltd International Business Division can set di erentiation basis through:
Quick new product development
Innovation integration in product designing
Innovative product features with patented technology
Procurement- Asian Paints Ltd International Business Division can set di erentiation basis through:
Reliable transportation to ensure quick delivery
Procure high quality raw material and replacement parts.

6. Value Chain Analysis Example

Value Chain Analysis of the Asian Paints Ltd International Business Division can be better understood with the help of some examples.

By using Value Chain Analysis, Asian Paints Ltd International Business Division can select and source premium quality raw material and develop
customer loyalty on the basis of it. It can also use Value Chain Analysis to develop brand identity.
Starbucks provides a good Value Chain Analysis Example. The organisation created a strong brand identity and set a strong competitive
advantage basis through aggressive marketing and strengthening coordination between marketing and product development department.
Asian Paints Ltd International Business Division can also achieve competitive di erentiation by speeding up the delivery of o ered products to
the nal customers.
Pizza Hut provides another successful Value Chain Analysis Example where organisation outpaced competitors by re-con guring value chain
activities to ensure quick delivery.
The Value Chain Analysis can also be used by Asian Paints Ltd International Business Division to improve its human resource practices.
FedEx is a good Value Chain Analysis Example to understand how Asian Paints Ltd International Business Division can achieve competitive
advantage through analysis of its human resource activities.
FedEx emphasised over its value chain support activities, invested heavily on employee development, took excellent human resource
initiatives and made visible infrastructure improvements, resulting into visible increase in brand loyalty and market share.
Asian Paints Ltd International Business Division can analyse value chain activities to reduce the costs, nd better deals with suppliers and o er
high quality products at a ordable prices.
A relevant Value Chain Analysis Example is provided by Walmart that continuously analyses its value chain activities to remain innovative,
minimise operational costs and o er low-cost yet reliable services.
Asian Paints Ltd International Business Division can analyse the support value chain activities to o er superior customer support. It can also
analyse the operational activities to expand the presence in geographically dispersed areas.
It can be understood with the help of another Value Chain Analysis Example. Starbucks places high importance to analysing value chain
activities and has successfully opened direct stores in more than 50 countries.
Asian Paints Ltd International Business Division can also use the Value Chain Analysis as a tool to do backward integration. It can be done by
merging or purchasing the suppliers to ensure timely raw material availability.
Apple provides a relevant Value Chain Analysis Example in this regard. The company is known for its e cient value chain and successfully
controls the product and parts.
The Value Chain Analysis can also be done by Asian Paints Ltd International Business Division to maximise the operational e ciency, reduce
waste and integrate sustainability in business operations.
Intel is a good Value Chain Analysis Example that has reduced the waste and negative impact on the environment by analysing its value chain
operational activities. The company has received appreciation for its waste reduction e orts.
Asian Paints Ltd International Business Division can learn from value chain practices of Dow AgroSciences. Dow has used Value Chain Analysis
to explore the unique marketing opportunities and extracted value from generic commodity market. The company has also used Value Chain to
manage the risks at di erent product lifecycle phases.
The above-stated examples show how Asian Paints Ltd International Business Division can bene t from conducting a detailed Value Chain
Analysis. However, it is also important to note that the Porter Value Chain model application depends on the unique contextual variables that
must be considered when assigning the weightage to primary and secondary value chain activities.

References
Baldwin, R. E., & Evenett, S. J. (2015). Value creation and trade in 21st century manufacturing. Journal of Regional Science, 55(1), 31-50.

Bustinza, O. F., Bigdeli, A. Z., Baines, T., & Elliot, C. (2015). Servitization and competitive advantage: the importance of organisational structure and
value chain position. Research-Technology Management, 58(5), 53-60.

Chang, W., Ellinger, A. E., Kim, K. K., & Franke, G. R. (2016). Supply chain integration and rm nancial performance: A meta-analysis of positional
advantage mediation and moderating factors. European Management Journal, 34(3), 282-295.

Chatterjee, S. (2017). Two e ciency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart. Strategy &
Leadership, 45(5), 18-25.

Dekker, H. C. (2003). Value Chain Analysis in inter rm relationships: a eld study. Management accounting research, 14(1), 1-23.

Fearne, A., Garcia Martinez, M., & Dent, B. (2012). Dimensions of sustainable value chains: implications for Value Chain Analysis. Supply Chain
Management: An International Journal, 17(6), 575-581.

Kircho , J. F., Tate, W. L., & Mollenkopf, D. A. (2016). The impact of strategic organizational orientations on green supply chain management and
rm performance. International Journal of Physical Distribution & Logistics Management, 46(3), 269-292.

Ramaswamy, V., & Ozcan, K. (2016). Brand value co-creation in a digitalized world: An integrative framework and research implications.
International Journal of Research in Marketing, 33(1), 93-106.

Riasi, A. (2015). Competitive advantages of the shadow banking industry: An analysis using Porter diamond model. Business Management and
Strategy, 6(2), 15-27.

Rieple, A., & Singh, R. (2010). A Value Chain Analysis of the organic cotton industry: The case of UK retailers and Indian suppliers. Ecological
Economics, 69(11), 2292-2302.

Wiengarten, F., Humphreys, P., Gimenez, C., & McIvor, R. (2016). Risk, risk management practices, and the success of supply chain integration.
International Journal of Production Economics, 171, 361-370.

Yoo, S. H., & Seo, Y. W. (2017). E ect of supply chain structure and power dynamics on R&D and market performances. Journal of Business
Economics and Management, 18(3), 487-504.

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