John Gove owns Cramar Pack n Wrap, a wholesaler of disposable food packaging products. Cramar deals in disposable food packaging made of aluminium and plastic. Its products include trays and bags made from aluminium and plates, cups and cutlery made from plastic. It buys all these products directly from the manufacturers and sells them to fast-food chains, takeout restaurants, food caterers and hospitals.
Cramar has long-standing contracts with large fast-food chains and major hospitals in the city and it sources its products mainly from product manufacturers in South America. Its sales turnover is approximately £10 million. The turnover has been growing at a rate of 20 per cent each year for the past five years. Its market share is currently 25 per cent of the wholesale disposable food packaging market in the UK. The sales team consists of four people, including Gove. Gove himself manages all the key accounts, and the smaller customers are handled by the other sales staff. Cramar has always maintained good relations with its suppliers, and this has helped it to advantageously renegotiate contracts with the same suppliers since the start of its operations. This has ensured a steady supply of quality products. Since most of its suppliers are based in other countries, most payments are settled in foreign currencies. Rather than selling the items under the original manufacturer’s brand names, Cramar repackages and rebrands the products using its own registered brand name. The company ensures that products procured from external manufacturers are of good quality by imposing strict quality checks. It has its own fleet of delivery vehicles, which makes delivery efficient. Cramar knows the importance of efficient customer service in boosting the company’s bottom line. To achieve this efficiency, it has completely streamlined its customer interaction process. The average times taken on these activities in the most recent quarter are given below:

Cramar’s management team believes in completely aligning itself to customer needs rather than pushing only the existing products to the customers. The company constantly researches customer requirements in the market and passes this feedback to its suppliers so they can tailor their products accordingly. Cramar Pack n Wrap has established itself as a successful player in the industry and now aims to capture the maximum market share. Gove is not confident that this is possible in the prevailing environment and is in constant talks with the management accounting team to come up with a concrete plan to achieve the targeted growth. Based on a comparison of the costs incurred by Cramar and the industry average costs, the management accounting team is more than confident that streamlining the company’s value chain is the best way to put it on an accelerated growth path.

Required
1. Cramar’s value chain is a part of Cramar’s environment. Identify whether or not its competitors are considered to be a part of its environment.
2. Identify the activities for which Cramar Pack n Wrap can use value chain analysis as a tool to analyse them.
3. Mention two things that Cramar would aim to achieve through the streamlining of its value-creating activities.
4. Identify how analysing Cramar’s inbound logistics would be a part of Cramar’s value chain analysis.
5. Identify the upstream relations that Cramar’s value chain would include.
6. Identify the downstream relations that Cramar’s value chain would include.
7. What activities should Cramar perform to gain a sustainable advantage over its competitors?
8. Identify why customer service is considered to be a part of Cramar’s value chain analysis.

Transcribed Image Text:

Value-creating activities Repackaging time Inspection time Delivery time Number of days 4.0 0.4 1.0