1)Explain the value chain and list the ways (minimum 4 ways/ points) value chain analysis benefits organizations. (5marks) 2. Woodworks Sdn Bhd produces a wide variety of furniture for both household and industry use. Competition in the industry has recently increase with new players in the market. In addition, cheap furniture imports from China is also eroding the market share of Woodworks Sdn Bhd. Management of Woodworks Sdn Bhd wants to cut cost for it's furniture products and also reduce price to remain competitive in the market. The CEO of Woodwork Sdn Bhd has directed the Management Committee (comprising of the Financial Controller, Design Engineer, General Manager for Marketing and the Human Resource Manager) to identify four (4) potential areas for cost reduction. After a series of discussion, the Management Committee has identified the following areas for cost reduction: Potential Cost Reductions Potential area for cost reduction Design Phase 1. 2. Manufacturing process 1. 2. Administration 1. 2. Change in quality or function 1. 2. Required a. For each of the potential areas for cost reduction, identify two (2) potential cost reduction actions. (16marks) b. Define and explain the term “supply chain" and its importance to cost management. (4marks)

1. Value chain analysis describes the activities within and around an organisation that relates them to an analysis of the competitive strength of the organisation, therefore it evaluates which value is particular activity adds to an organisation's product or services.

the purpose of value chain analysis is to increase production efficiency so that a company can deliver maximum value for the least possible cost.

Organisational Benifits:-

1. Technological development in organisation: - value chain analysis is used in organisation for research and development stage entailing practices like developing manufacturing techniques and automating process.
2. VCA Improved flow of information in organisation:- Value chain analysis provides real time information to the customer which is accessible to concerning product.In value chain analysis flow of information in environment would never be interrupted and the relationship between the customer and supplier become strong.
3. VCA Improved flow of finance in organisation:- Value chain analysis also helps the organisation in financial flow it optimises the financial information in the organisation which can be used to identify New Market opportunities and take the competitive advantage of them and to reduce the risk that threatened the business.
4. VCA developed competitive advantage in organisation:- value chain analysis finding out the expectation of your customers, profitability meeting those expectation and even going one step further of surpassing them.it increases overall competitive advantage derived from the difference between the value you offer to your customer and the cost of creating that customer value.

(A)   potential area for cost reduction

manufacturing process :- (1) review and redesign product and process (2) avoid over scheduling of staff and review staff wages and hours.

Design phase :- (1) reduce prototyping (2) concentrate in the planning stages and good project management.

Cost reduction in administration (1) limit travel and entertainment expenses (2) eliminate paper and stationery wastage and sub lease office and yard.

Change in quality or function:- (1)prevent material loss (2) eliminate unprofitable clients and find less expensive supplier.

(B)   supply chain :- supply chain is defined as the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through their distribution process and sale. the supply chain also represents the steps in it takes to get the product or services from its original state to the final customer.

Importance of supply chain in cost management.

It iimproved customer service:- supply chain strategy provides delivery of customer product quickly and on time.

Reduce operating cost :- supply chain management allows a business to decrease the cost of purchasing and production and eliminate the material loss.

Improve financial position :- supplysupply chain control and reduce the purchasing and production cost so it increases the the companies profit which dramatically increases the company's performance and profits.