Strategic Management

According to Michael Porter value is the chain of activities for a company that operates in a specific industry. For gaining the competitive advantages, Porter suggested that going through the chain of organization activities will add more value to the product and services than the sum of added cost of these activities. And thus, the company will gain marginal value for that product or service. If these activities run efficiently the company gains competitive advantage on the product or service. For this case the customers should transact the product or services willingly and provide return on value to the organization (Saha, 2011). The value chain framework can be used as powerful analysis tool for the strategic planning and to build the organizational model ensuring an effective leadership model. The value chain concept can be applied also in the individual business unit and can be extended to the whole supply chains and distribution networks. To form a successful product for an organization it is important to add value in each activity that the product goes through during the life cycle. The best possible value can be achieved in the product development process by adding value in each stage. For that it needs all, or a combination of, value chain activities and a proper synchronization among all the related activities. A proper organization is required that contains all the required functional departments to perform these activities and a proper communication approach is required to synchronize the activities of these functional units efficiently (Saha, 2011). The value chain is as described below:

Figure 1 Porters value chain analysis One of the firm that uses this theory as a baseline for its management is Integrated Micro Solutions Sdn Bhd (IMS) which was formed in March 2003 with the objectives of achieving and delivering effective custom ICT solutions to clients. According to the theory

above, it can be divided to primary activities and support activities. Primary activities can be classified into product related and market related activities. Product related activities is the activities that the organization performs to add value to the products and services it. The activities are classified as inbound logistics which describes the production and development activities, organizations need inputs as goods which are received from the suppliers. Inbound logistics refer to all the activities related to receive goods from the suppliers, decision about the transportation scheduling, storing the goods as inventory, managing the inventory, and make the inputs ready to use for the production of end products. This company involves in services such as designing,developing, offering ICT solutions. The team is growing with valuable experiences hand in hand with semi-governments, branding agencies,in-house development teams, e-commerce giants, big businesses, small boutiques and dot com startups. The extra point for this company is that in the software world these days, the switching costs from one supplier to another is very high, hence once IMS is bound to a company for their software needs, it has always been loyal towards its suppliers and get the most latest updates in the software world to satisfy the growing needs of its customers. This clearly follows the porters theory where in order to reduce the bargaining power of suppliers, a company tends to increase its dependency towards its suppliers and provide chain training among its workers. IMS also aware the trends of its suppliers knowledge on costs and methods of business. As for operation, includes the production process, development activities, testing, packaging, maintenance, and all other activities that transform the inputs into finished product. In IMS operation, it always have been designing interactive new websites and softwares to attract customers. Its products are always tested and packed and it provided the monthly or per annum servicing for the products it sells. IMS also up-grades its systems for their customers through its online-based company system which makes its customers hassle free and for easier business communications. The final of product related is services where an Organization offers the services after the products and or services have been sold. These service activities enhance the products value in the form of after sales guarantees, warranties, spare parts management, repair services, installation, updating, and trainings. IMS does provide training to its customers on the usage of new software and updates so that they will be informed and understand the importance of the new software upgrades and its benefit for their own customers usage companies (Integrated Micro Solutions, 2009). Market related activities refer to activities that the organization performs to transfer the finished products or services to the customers. The activities are classified as outbound logistics and marketing and sales (Joris, 2002). Outbound logistics are described as finished products that are developed using the product related activities. Now activities are required to transfer the finished products to the customers via warehousing, order fulfilment, transportation, and distribution management. IMS handles these procedures by online communication via its official website to interact with their customers, and transporting and distributing the products based on customers convenience. Marketing and Sales refers to activities include the advertising, channel selection, product promotion, selling, product pricing and retail management. The activities are performed to make sure that the products are transferred to the targeted customer groups. Marketing mix can be an instrument to take the competitive advantage to the target customers. IMS have used many advertising and product promotions through online website, its official websites and shopping complexes by participating in computer and software fairs held every year. The product pricing is fixed based on the competitors current price which allows customers to choose the best product from IMS and offering warranties and services necessary to attract customers. Retail

management is done by selling limited items to the customers but provide additional services such as upgrades on websites and windows services. Support activities are the activities that the organization performs to assist the primary activities to gain the competitive advantage. The activities are classified as procurement, technology management, human resource management and infrastructure (Kotler,2008). Procurement is the purchasing activity of the inputs to transform these into finished products or services. Procurement adds value by the acquisition of appropriate goods or services at the best price, at the right time, and in the desired place with the desired quality and quantity. The procurement in IMS happens as a result of competition among software companies to give best possible service for its customers. IMS always have data base of service and schedules for the upgrades necessary for its customers with best affordable price. Technology Management is very important in todays technological driven environment. Technology can be used in production to reduce cost, to develop new products, increase customer service facility and to build up cost effective process. It supports the value chain activities such as research and development, process automation and process design. IMS uses new software and uses the knowledge and skills of its young interns in gaining ideas of providing the best ideas for its customers.Human Resource Management is where by key roles of HR are to support the attainment of the overall strategic business plan and the objectives. As a strategic business partner HR designs the work positions by hiring, recognition, reward, appraisal systems, carrier planning, and employee development (How Hierarchy Can Hurt Strategy Execution, 2010). They act as an advocate of the employees to motivate them and create a happy working environment. For the organizational changing situation, HR executes the strategic needs of the organization with minimum employee dissatisfaction and resistance to change. IMSs human resources have always been considerate in providing the needs of its workers. They hire their workers mostly from their experiences and workers who had been doing internship with this company before. Fresh graduates are selected based on their skills and interview process to select the best candidate to work for the progress of the company. Working staffs are given appraisal once in every six months by senior officers in order for them to evaluate their progress and management of their own work. Infrastructure includes the planning management, legal framework, financing, accounting, public affairs, quality management and general management. These are required to perform the value added activities efficiently to drive the organization forward to meet the strategic plan and the objectives. IMS have always been efficient in management of its administration as it always have pre-planning from its annual meetings in discussing the legal works, financing and accounts of its company and decide the future or the company achievement progress in the next few years and targets that need to be achieved(Integrated Micro Solutions, 2009). The forces in the macroenvironment that are affecting IMS business now and are likely to continue to do so in the future are evaluated according to political, economical, socio-cultural, technological, legislation and ecological. According to political and legislation view, government policy on Sendirian Berhad (SDN BHD) or a private limited company is a very common business entity here in Malaysia as been integrated into IMS. Following the Companies Act, 1965 which says although complying itself is not a disadvantage, the amount of effort required to comply with the Act is much more than a sole proprietor or partnership. Moreover the company had to perform annual audits on its financial statements. At least one company secretary is required to manage its statutory submissions and returns as well as attending and preparing minutes for board and shareholders meetings. Incorporation cost is high, and there are yearly recurring fees to be paid such as audit, accounting, company secretarial and tax fees. However due certain circumstances,as the business grows, revenue

and business volume will increase. Customers will request for longer credit term and higher credit limit, hence an increased credit risk. In turn, the company will also request suppliers and bankers to extend their credit facilities, which means higher liabilities. The limited liability protection given to the shareholders clearly outweighs all the operational and financial disadvantages as discussed above (Services, 2009). Economically, customer expenditure and infrastructure costs are being analysed (Profit The customers for IMS are worldwide and have been growing very rapidly due to its management skills and up-to-date technologies on software programmes. The location of IMS which operates in a small-house based business and less staffs been an advantage as it operates in less energy consuming environment with experienced staffs. IMS have always been providing the best solutions to its customers and updating its services from time to time to compete with the growing software industry these days. IMS does provide services such as Web 2.0 Design and Development, Branding and Identity ,Brand Management, Flash Animations, CMS Content Management System, Web Maintenance and Support, E-Commerce Development, Rich Internet Applications (RIA), Windows Applications, Windows services, Internet Web 2.0 Applications, Internet Web 2.0 Applications, Automated Online Payment Systems and Gateways, Server Setup and Integrations, Network Hardware Setup, Joomla or Wordpress Customization and Integration and KOHA Open Sources Library Customization and Integration (Integrated Micro Solutions, 2009).
and Net Income,2009).

According to socio-cultural analysis, the aspects of demography, consumerism, education and health, social attitudes to work, health, the environment, social mobility and income distribution are viewed. Demography refers to births, deaths and survivals associated with the IMS. The company which have been operating since 2003 made its establishment in the year 2009 by having its own website and clients all over the year on 2009. The company which was only focused on clients for inside Malaysian have extended its services to countries such as Thailand, Hong Kong and Vietnam. The experts in this field who have been working in IMS have been trained well and sent to many software seminars and conference to excel and gain experience in the technology field to cater its customers. Health facilities are also being provided by IMS for its staffs in order to have quality of work and to have a healthy and harmonious environment (Integrated Micro Solutions, 2009). Technology involves government spending on research, adoption of new technology, new products and developments and obsolescence of existing technology. IMS always have been involved in government programmes by sending its staffs as representative or for software invention competitions. The innovative thinking of its staffs and hiring new interns has always made IMS to have the youthful ideas with fresh ideas among its workers. Resultant is new products which not only benefits the company or government but also have been promoted to other countries. Its software inventions and solutions always have been customer friendly and easily operable, hence less technical errors found. Ecologically, aspects such as pollution control, planning policies, transport policies and disposal of waste should be viewed. Based on IMS, due to its in-house location, it never been a pollution issues as it never deals with hardware producing items. Disposing its unused materials by recycling its products to make other products has been the practise of its staffs and they are very experienced with it. The unused materials are made into other form of useful part of software which can be used by other customers.

As a summary, the porter value chain model framework can be generally defined as nine major functions of business (M.Porter, 1988). This includes production, production management, quality management, marketing and sales, general management, marketing and sales management, accounting and finance, research and development, and the last which is human resource management (Tulsian, 2002). The success of a company is measured by its profitability, which is closely connected to the efficiency of the performed activities. All the activities in an organization have cost and generate a return. If rate of return is greater than the cost the activities add value to the organization. For achieving the premium rate of return, businesses need to perform economic activities efficiently. According to Porter the efficiency of the activities depends on the finalization processes in the interrelated areas of the organization, strategy, and tactics. The platform of performing activities is the business organization. The pre condition to accomplish the value added activities is the efficient organization. The efficient organization must have all the value added functions of business for the proper interrelations of value added activities. Individually all the single business function also produce the result and perform value creation activities. For achieving Porters value added efficiency it is important to include all nine major functions as sub-functions in each major business function.

Refference:
"How Hierarchy Can Hurt Strategy Execution", Hervard Business Review, Pages: 74 75, July-august 2010 . . Profit and Net Income, Princeton University, Wordnet Princeton, 2009.

Avijit Saha. (2011). Mapping of Porters value chain activities into business functional units. Available: http://www.managementexchange.com/hack/mappingporter%E2%80%99s-value-chain-activities-business-functional-units. Last accessed 7th March 2012. Integrated Micro Solutions. (2009). Adapt, Adjust, Accomodate.Available: http://www.ims.my/index.html. Last accessed 5th March
M. Joris, M. J. Brand, Organisational Structure and Performance, SCALES-paper N200214, Jun 2002. M. Porter, On Competition, Harvard Business School Press, Boston MA, 1988. P. Kotler, K. Keller, Marketing Management, 13E, 2008 P. Tulsian, Financial Accounting, Tata McGraw Hill, New Delhi, 2002.

Services, Accounting KL Management. Business Entities Malaysia - Sendirian Berhad (Private Limited):Find out more about Private Limited Companies in Malaysia [Internet]. Version 2. Knol. 2009 Jan 19. Available from: http://knol.google.com/k/accounting-klmanagement-services/business-entities-malaysia-sendirian/zldh5amdpvqb/3.