Page 293 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes a purely global strategy with standard products was not appropriate. Whirlpool would
have to adapt its products to local markets, but maintain some global integration in
order to realize cost benefits. This strategy is known as “mass customization.” Whirlpool
acquired Philips’ Major Domestic Appliance Division, 47% in 1989 and the remainder in
1991. Initially, margins doubled as predicted. However, local competitors responded by
better tailoring their products and cutting costs; Whirlpool’s profits then began to decline.
Whirlpool applied the same strategy to Asia, but GE was outperforming Whirlpool there
by tailoring its products as part of its multi-domestic strategy.

Source: http://www.quickmba.com/strategy/global/
15.3.3 support activities

The support activities of the value chain provide inputs that allow the primary activities to take
place (see Figure 15.2). The materials management (or logistics) function controls the transmission
of physical materials through the value chain, from procurement through production and into
distribution. The efficiency with which this is carried out can significantly lower cost (lower C),
thereby creating more value.
Similarly, the human resources function can help create more value in a number of ways.
It ensures that the company has the right mix of skilled people to perform its value creation
activities effectively. The Human resources function also ensures that people are adequately
trained, motivated, and compensated to perform their value creation tasks.
Information systems refer to the normally electronic systems for managing inventory, tracking
sales, pricing products, dealing with customer service inquiries, and so on. Information systems,
when coupled with the communications features of the Internet, can alter the efficiency and
effectiveness with which a firm manages its other value creation activities.
The final support activity is the company infrastructure. By infrastructure we mean the context
within which all the other value creation activities occur. The infrastructure includes the
organizational structure, control systems, and culture of the firm. Because top management can
exert considerable influence in shaping these aspects of a firm, top management can exert shape
the infrastructure of a firm and through that the performance of all other value creation activities
within it.

Task Identify a support activity in any organisation in your reference and analyse it.

self assessment

Fill in the blanks:

1. The ................. function can help create more value in a number of ways.
2. ................. refer to the normally electronic systems for managing inventory, tracking sales,
pricing products, dealing with customer service inquiries, and so on.
3. The final support activity is the ................. infrastructure
4. ................. have to do with the design, creation and delivery of the product; its marketing;
its support and after sales service.
5. ................. can be treated as a value chain composed of series of value creation activities
including production, marketing, sales, materials management, R&D, human resources,
information systems and the firms infrastructure.

288 lovely Professional university