VALUE CHAIN ANALYSIS OF CAPRI HOLDINGS

Porter's Value Chain Model is extremely popular in the business world. However, Capri
Holdings should not take it as a rigid framework by assigning the equal importance to all
activities. The effective Value Chain Analysis requires Capri Holdings to realize that all the
activities do not need same analysis level. Hence, the first step of acclimating the Porter
Value Chain framework is to identify the importance of activities according to their role in
product/service delivery process.

2.1 Primary Activities

2.1.1 Inbound Logistics
It is important to develop strong relationships with suppliers as their support is necessary to
receive, store and distribute the product. Without analysing the in-bound logistics, Capri
Holdings can face various challenges in product development phases. Analysis of in-bound
logistics expects a company to focus on every aspect of transformation from raw material to
final product. Some examples of inbound logistics are retrieval of raw material, storing the
inputs and internally distributing the raw material to start production.
2.1.2 Operations
The importance of analysing operational activities raises when raw material arrives, and
Capri Holdings is ready to process the raw material into the end product and launch it in the
market. Some operational activities are machining, packing, assembling and testing.
Repairing and maintenance of equipments also fall into this category.
It includes both- manufacturing and service operations. Analysis of operational activities is
important for raising the productivity, maximising the efficiency and ensuring the
competitive success for Capri Holdings. The increased productivity can help Capri Holdings
to achieve consistent economic growth, increase profitability and set a powerful basis for
competitive advantage.
2.1.3 Outbound Logistics
Outbound logistics include the activities that deliver the product to the customer after
passing through different channels and intermediaries. Outbound logistics activities include
material handling, warehousing, order processing, transporting and delivering. Capri
Holdings can optimise the outbound logistics to explore competitive advantage sources and
achieve its business growth objectives.
Because, when outbound activities are timely managed with optimal costs and there is a
minimum negative effect on the quality due to product delivery process, it maximises the
customer satisfaction and increases growth opportunities for the firm. Capri Holdings should
pay specific importance to its outbound value chain activities when its offered products are
perishable and require quick delivery to the end customer.
2.1.4 Marketing and Sales
At this stage, Capri Holdings will highlight the benefits and differentiation points of offered
products to persuade the customers that its offering is better than competitors. Only
producing a high quality product at affordable costs and distinctive features cannot create
value until Capri Holdings invests on the marketing and sales activities. The sales individuals
and marketing department play an important role in this.
Some examples of Capri Holdings' marketing and sales activities are- sales, advertising,
promotional activities, pricing, channel selection, customer relationship and building
relations with channel members. The marketing funnel approach can be used to structure
its marketing and sales activities. The marketing strategies can either be push or pull in
nature, depending on the Capri Holdings’ business objectives, brand image, competitive
dynamics and current standing in the market.
Effective and wisely integrated marketing activities can develop the brand equity of Capri
Holdings and help it stand out from the competition. However, Capri Holdings must avoid
making false commitments about product features that cannot be fulfilled by the
production department. It shows the need to establish coordination between different
value chain activities.
2.1.5 Services
The pre-sale and post-sale services offered by the Capri Holdings will play an important role
in developing customer loyalty. For most customers post-sale services are as important as
marketing and promotional activities. The power of negative e-WOM due to poor support
service cannot be undermined in the current technologically advanced era. The company
must analyse its support activities to ensure that the brand reputation is not damaged, and
instead use it as a tool to spread positive WOM due to quick and efficient support services.
2.2 Secondary Activities
The support activities play an important role in establishing the coordination and facilitating
the primary value chain activities. Capri Holdings can also benefit from analysis of its
support activities.
2.2.1 Firm infrastructure
The firm infrastructure denotes a range of activities, such as- quality management, legal
matters handling, accounting, financing, planning and strategic management. Effective
infrastructure management can allow Capri Holdings to optimise the value of the whole
value chain. Capri Holdings can control the infrastructure activities (or commonly called
overhead costs) to strengthen the competitive positioning in the market.
2.2.2 Human resource management
Capri Holdings can analyse human resource management by evaluating different HR
aspects, including- recruiting, selecting, training, rewarding, performance management and
other personnel management activities. The effective HR management can allow Capri
Holdings to reduce competitive pressure based on motivation, commitment and skills of its
workforce. The company can also achieve its cost minimisation objectives by analysing
hiring and training costs with their relative return. The heavy dependence of Capri Holdings
on employees' talent will increase the importance of this value chain support activity.
2.2.3 Technology development
In a technological advanced era, almost all value chain activities are dependant on
technological support. The technological integration in all the activities including production,
distribution, marketing and human resource activities require Capri Holdings to realise the
importance of technology development. Some examples of this are - automation,
technologically powered customer service, product design research and data analytics. It
also includes research and development department of Capri Holdingss.
2.2.4 Procurement
The procurement in value chain denotes the processes involved in purchasing equipments,
raw material, supplies and other items necessary for producing the finished product. Since
procurement us linked with various value chain activities, Capri Holdings should be careful in
its procurement activities to optimise the inbound, operational and outbound value chain.
As mentioned above, Capri Holdings should analyze the importance of all activities. After
understanding the relative importance of identified value chain activities, Capri Holdings
should highlight areas where value can be added, cost efficiency can be achieved,
differentiation can be done, or processes can be optimised.