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Value chain

Prepare a report which describes and explains the value chain of the organisation in which you work or for a business or organisation of which you have a deep understanding.  Include in your report an evaluation of the value chain's ability to provide a suitable framework for considering management accounting issues within your organisation. Ensure that you have identified the key management accounting issues that are relevant to your organisation. Information on report writing is in the Resources section of this subject site.

The value chain is basically a business model that provides description in regard to all the activities that are to be carried in order to produce a product. The value chain analysis is being conducted in the business by evaluating different procedures which are being involved in relation to every step in the business process. The value chain analysis in the business helps in increasing the efficiency in the level of production in order to provide maximum value by the company at the lowest possible cost.

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The value chain had become an important part of the business. The need of the value chain had been increasing as the level of the competition had increased, there are unbeatable prices, different, new and exceptional products are arising, loyalty of the customers, hence the value chain is the most required element in order to retain the competitive advantage of the business. The value chain is being conducted in the business by dividing the activities of the business into two heads which are primary activities and support activities. The primary activities are those which are very helpful in order to add the value to the business. The support activities are those which help in increasing the level of the efficiency of the primary activities. There are various key management accounting issues that may affect the level of productivity of the business such as the different techniques of management accounting may not reliable, the management accounting may increase the cost of the business, the management accounting techniques can easily be changed and hence may lead to biased results and the techniques of the management accounting are not consistent with the policies of the GAAP. The value chain is very helpful in the management of the management accounting issues that arise in the business. The value chain ensure that the business is using specified accounting policies which are being in compliance with the GAAP. The value chain is also conducted in an effective manner in order to reduce the cost of the business. The value chain analysis starts with the raw materials that are being used in order to start the production, and thus adds the different activities and costs which are required in order to make the product saleable in the market. The value chain management helps in proper organization of the above activities. Hence it helps in establishing communication amongst the different heads of every activity in order to ensure high level of efficiency in the delivery of product and service to the customer. The value chain management helps in proper identification of the cost drivers related to each activity. Hence it helps in calculating true cost of a product and service. Thus it also helps in knowing the links between activities and also helps to know the way of reduction in the cost. Thus it helps in indentifying activities that add more to the customers and which will be given priority.

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