First our thanks go for our beloved God almighty for giving me the knowledge to achieve this work therefore, our best appreciations and respect go to Marni Azlina Deraman our beloved lecturer who has stood with us during the class lectures and lap, breaking down this subject obstacles and complexities, by guiding us with his rich information and professional mechanisms so we could understand the concept of this group assignment. Thanks to Limkokwing University for giving us the suitable educational and research library environment, which provide us all the resources and internet facility. ------------------------------------------------ Background of the Company Telekom Malaysia Berhad (TM), Malaysia’s broadband champion and leading integrated information and communications group, offers a comprehensive range of communication services and solutions in broadband, data and fixed-line. As a market leader, TM is driven by stakeholder value creation in a highly competitive environment. The Group places emphasis on delivering an enhanced customer experience via continuous customer service quality improvements and innovations, whilst focusing on increased operational efficiency and productivity.
Leveraging on our extensive global connectivity, network infrastructure and collective expertise, TM is well positioned to propel Malaysia as a regional Internet hub and digital gateway for South-East Asia. TM remains steadfast in its transformation into a new generation communications provider to deliver an enhanced and integrated digital lifestyle to all Malaysians, and opening up possibilities through connection, communication and collaboration, towards our shared vision of elevating the nation into a high-income economy.
As a model corporate citizen committed to good governance and transparency, TM continues its pledge to ensure the integrity of our processes, people and reputation as well as the sustainability of our operations. Our Corporate Responsibility (CR) ethos reinforces responsible behavior in the four main domains of the marketplace, workplace, the community and the environment. With a focus on ICT, the Group further promotes 3 major platforms i. e. education, community/nation-building and environment, through our Reaching Out programmers.
TM is also a multiple corporate awards winner, having been recognized consistently for our high standards in Corporate Governance as well as the Anugerah CSR Perdana Menteri for Best Workplace Practices two years consecutively, in 2009 and 2010. TM was most recently honored with 5 National Annual Corporate Report Awards (NACRA) 2010, notably the Platinum Award for CSR; and 4 Frost and Sullivan Malaysia Excellence Awards 2011, including Best Broadband Service Provider of the Year.
The value chain approach was developed by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage in the business arena of the 21st C. All organisations consist of activities that link together to develop the value of the business, and together these activities form the organisation’s value chain.
Such activities may include purchasing activities, manufacturing the products, distribution and marketing of the company’s products and activities (Lynch, 2003). The value chain framework has been used as a powerful analysis tool for the strategic planning of an organisation for nearly two decades. The aim of the value chain framework is to maximise value creation while minimising costs (www. wikipedia. org). Main aspects of Value Chain Analysis
Value chain analysis is a powerful tool for managers to identify the key activities within the firm which form the value chain for that organisation, and have the potential of a sustainable competitive advantage for a company. Therein, competitive advantage of an organisation lies in its ability to perform crucial activities along the value chain better than its competitors. The value chain framework of Porter (1990) is “an interdependent system or network of activities, connected by linkages” (p. 41). When the system is managed carefully, the linkages can be a vital source of competitive advantage (Pathania-Jain, 2001).
The value chain analysis essentially entails the linkage of two areas. Firstly, the value chain links the value of the organisations’ activities with its main functional parts. Then the assessment of the contribution of each part in the overall added value of the business is made (Lynch, 2003). In order to conduct the value chain analysis, the company is split into primary and support activities (Figure 1). Primary activities are those that are related with production, while support activities are those that provide the background necessary for the effectiveness and efficiency of the firm, such as human resource management.
The primary and secondary activities of the firm are discussed in detail below. Primary activities The primary activities (Porter, 1985) of the company include the following: * Inbound logistics These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. * Operations These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc. Outbound logistics these are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel. * Marketing and sales This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firm’s products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products. * Service
There is often a need to provide services like pre-installation or after-sales service before or after the sale of the product or service. Support activities The support activities of a company include the following: * Procurement This function is responsible for purchasing the materials that are necessary for the company’s operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices. * Human Resource Management This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company.
Human resources are increasingly becoming an important way of attaining sustainable competitive advantage. * Technology Development This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive. * Firm Infrastructure * This includes planning and control systems, such as finance, accounting, and corporate strategy etc. (Lynch, 2003). Porter used the word ‘margin’ for the difference between the total value and the cost of performing the value activities (Figure 1).
Here, value is referred to as the price that the customer is willing to pay for a certain offering (Macmillan et al, 2000). Other scholars have used the word ‘added value’ instead of margin in order to describe the same (Lynch, 2003). The analysis entails a thorough examination of how each part might contribute towards added value in the company and how this may differ from the competition. In a study of Saudi companies, Ghamdi (2005) found that 22% of the companies in the study used value chain frequently, while 17% reported that they somewhat used it, and 42% did not use the tool at all.
An interesting finding of the study was that the manufacturing firms were frequent users of the tool compared to their service counterparts (Ghamdi, 2005). Conclusion The value chain framework has been used as a powerful analysis tool for organisational strategic planning for nearly two decades now. The value chain framework shows that the value chain of a company may be useful in identifying and understanding crucial aspects to achieve competitive strengths and core competencies in the marketplace. The model also reveals how the value chain activities are tied together to ultimately create value for the consumer.
The five primary activities and four support activities form an interdependent system that is connected by linkages. Analysts conducting the value chain analysis should break down the key activities of the company according to the activities entailed in the framework, and assess the potential for adding value through the means of cost advantage or differentiation. Finally, it is important to determine strategies that focus on those activities that would enable the company to attain sustainable competitive advantage.
It is important to analyse the value chain of a company with the core competence at its very heart. The nature of value chain activities differs greatly in accordance with the types of companies and industries. The value chains of companies have undergone many changes in the last two decades due to advancements in technology facilitating change at a very rapid pace in the business environment. Outsourcing will cause major changes in organisations and their value chains, with significant managerial implications. -------------------------------------------- [ 1 ]. The Value Chain: Source: Porter (1985)