Support Activities

Primary Activities

To understand the problems faced by Mystique, we need to review the primary and the

secondary activities of the company using Michael Porter’s value chain model as below.

Porter’s Value Chain Analysis

Michael Porter has identified a set of interrelated generic activities to analyze the firms’

competitive advantage. It is useful to model the firm as a chain of value-creating activities.

The value chain is useful to assess the areas of weakness and then strengthen those areas for

company’s profitability and competitiveness. The model is useful in determining the ways in

which an organization can implement IT or add value to the products and services. The goal

of these activities is to create value that exceeds the cost of providing product or service, thus

generating a profit margin. The generic chain consists of five Primary activities and four

Support activities. The primary activities are business functions that relate directly to the

production of the organization’s products and services and the support activities include

functions that assist and facilitate the primary activities (University of Cambridge, 2012). The

company’s survivability depends on the effectiveness of performing these activities.

Value Chain Analysis for Mystique

The primary activities will differ as the model of service changes, but the support activities

will not differ. An application of the Porter’s value chain model is as follows:

Firm’s Value Chain

Ordering Fulfilment Design Manufacturing

Distribution Centres

Stores

Administration and Systems

Procurement

Business Support Units

Figure: Porter’s Value Chain Model for Mystique

The above figure suggests that Mystique performs a number of operations. The primary

activities at Mystique are comprised of ordering, fulfilment, design and manufacturing, and

among these activities, ordering was the most regular, precisely defined, and standardized

around the world. Mystique has differentiated itself from its competitors by adding value in

the every step right from manufacturing to distribution to sales.

Mystique has a flat and decentralized decision-making. The store managers at Mystique had

the autonomy to select the inventories at each store rather than depending on the headquarters

to make the decision. The store managers decided items on sale, and deal with the customers,

property owners, and contractors. The store managers communicated with the commercials

and worked in close proximity. The commercials decide on the clothes production and design

and higher-level managers typically did not review their decisions.

Mystique’s distribution centres manage the inbound logistics of receiving, warehousing and

inventory control of input materials. Mystique’s distribution centres receive bulk quantities of

each garment and then recombining each garments for shipment to each store. The use of

information systems helps keep track of the stock- keeping units. Mystique does not stock

inventory and so reduces the inventory risk. There is little inventory anywhere in the

Mystique’s supply chain. The clothes reach from the factories to the distribution centres to

the stores for sale. Mystique has pioneered its operations, which enables the constant

introduction of new items in short lead times.

Mystique’s stock-keepings units and the distribution centres manage the outbound logistics

where they match the supply and demand. The production of the items was determined

according to the demand of the item to reduce the overall cost and inventory risk. Mystique

believes that its customers and stores are the form of marketing rather than advertising.

Mystique is supported by various activities such as procurement, technology development,

human-resource management, and firm’s infrastructure. Most of the activities are common to

other industries. On the support activities for Mystique, it has an internal IT department for

the development of various applications. This use of information technology has reduced the

overhead costs and has developed a cost advantage.

Key Findings

Primary

Activity

Current Scenario Problem(s) Solution(s)

Ordering Manual checking of

inventories for

ordering

Lack of in-store

computers to check

inventories and

sales. Also cannot

match the exact

inventory

Cannot look at

inventories in other

stores

In-store computers to

check inventories

Fulfilment Commercials cannot

match the exact

supply and demand

Lack of in-store

computers makes it

difficult to check

which store needs

the items

To make use of IT

Design Commercials decided

on the design

Commercials

within the design

teams make a

guess of the design

and communicate it

with factories

Use of IT will help

track sales data, and

ease the

communication with

the store managers

Manufacturing Has vertically Internally developed Use of universal

integrated

manufacturing

operations,

which enables

constant

introduction

of new items

with short

lead times

Has internally

developed

simple

applications to

plan

production

software applications are

not compatible with the

outside applications

compatible software

Distribution

Centres

Distribution Centres

use internally

developed

applications to

control the

distribution centres

automation often in

collaboration with the

vendors of conveyor

equipment

The Internally developed

software may not be

compatible with the

vendors

Use of vendor

compatible software

Stores The store managers

manually check the

inventories

No in-store networking

available

In-store networking

should be available

Support

Activity

Current Scenario Problem(s) Solution(s)

Administrati

on and

Systems

Uses standard

commercial

applications for

office

productivity

(word-

processing, e-

mails)

IS department

responsible for

the internal

development of

applications

Internally developed

applications by the IT

department may not be

suitable for use

Use of vendor

compatible software

Procurement There are fewer

inventories in the entire

supply chain

Lack of computers in

stores, makes it difficult to

match the exact inventory

In-store computers

Business

Support

Areas

Has support areas for

Expansion,

International,

Logistics,

Raw material,

Manufacturing Plants

Communication is difficult

Time consuming

Use of IT for

easy

communication

Use of IT can

make centralized

operations

possible