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Fall 2013 smu solved assignments of MB0052 Q1. Write Short notes on the following: (a) Value Chain Analysis (b) Corporate Restructuring

Answer: a) Value chain analysis: Each organization has its own internal value chain of activities. Michael Porter suggested that the value chain of an organization can be split into primary activities and support activities.
 Primary activities are those that are concerned with creating and delivering the end product.
 Operations
 The raw goods acquired are converted into the final product. Value is added to the product at
this phase as it moves through the production line.
 Outbound logistics
 Once the products have been produced, they are ready for distribution to distribution centers, wholesalers, and retailers.
 Marketing and sales
 Marketing ensures that the end product is targeted to the right customer group. The marketing process establishes an effective strategy
 The support activities aid the primary activities in helping the organisation achieve its competitive advantage.
 Procurement
 This section supplies raw material for the organization and obtains the best price and quality.
 Technology development
 An organization should be technology driven. The organization uses technology to reduce production cost, which in turn adds value, and to develop new products through research and development.
 Human resources
 The organization has to recruit and train the right people to succeed in their objectives. The organization has to encourage its employees and pay them the market price if they are expected to stay with the organization and add value to it during their period of employment.

b) Corporate restructuring
 Corporate restructuring is the process of fundamental change in the current strategy and direction of the organization. This change affects the structure of the organization. Corporate restructuring involves increasing or decreasing the levels of personnel among top level, mid-level and lower level management. It is reorganizing and reassigning of roles and responsibilities of the personnel due to unsatisfactory performance and poor results.

Corporate restructuring deals with the following factors:

·         Correction of inadequate authority patterns
·         Creation of a more focused diversification strategy
·         Augmentation of strategic control
·         Reduction of trust on bureaucratic control through reduced corporate staff
·         Development of the performance of the firm and shareholder wealth

Restructuring plans include merger and acquisitions, capital reduction, debt rescheduling, rights of secured and unsecured creditors, shareholders' rights, administrative costs etc. A firm's restructuring process also includes discontinuation of business processes, closing several plants, making extensive employee cutbacks, etc.

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