A Value chain is used to describe all the business activities it takes to create a product from start to

finish (e.g., design, production, distribution, and so on). A value chain analysis gives businesses a visual
model of these activities, allowing them to determine where they can reduce costs.
Porter's 5 forces are:

• Competition in the industry

• Potential of new entrants into the industry
• Power of suppliers
• Power of customers
• Threat of substitute products

BPR :

Introduction Business Process Reengineering

Originally pioneered in the early 1990s, business process reengineering involves the radical redesign of
core business processes to achieve greater improvements in productivity, time cycle and quality. In
Business Process Reengineering, companies start from beginning and redesign the existing processes to
deliver more value to the customer.

Benefits of Business process reengineering trend

1. Reduces cost and cycle time

2. Helps in improving quality

Business Process Reengineering consists of five major steps. Managers should focus on:

• Refocus company values according to the needs of customer.

 • Redesigning of core processes.
• Reorganize the business into cross-functional teams with end-to-end responsibility.
• Rethink basic organizational and people issues.
• Improve business processes of the organization.

Reengineering Work: Don’t Automate, Obliterate, 1990

In 1990 Micheal Hammer published the article in which he stated that the manager’s main issue is to wipe
out those processes which are not adding any value to the product.

Hammer’s claim was simple: Most of the work being done does not add any value for customers, and this
work should be removed, not accelerated through automation. Companies should work on satisfying
customer needs and decreasing cost structure. Until 1993, 60% of fortune companies had either
implemented this policy or were planning to implement it even after it having a disadvantage of reducing
work force.

Development after 1995

After publication by some critiques in 1995 & 1996 the reengineering trend decreased. But after then it
became a widely accepted technique but its way of implementation had changed.

Positive and negative aspects of Business Process Reengineering

A trend can result into success or failure depending on conditions it is implemented in.

Positive Aspects of BPR are –

• Business process reengineering is performed in such a way that it always provides agility to the
business so that the business can overcome the previous barriers and function smoothly compared
to before.
• Reduced costs that are associated to the business process execution.

• Customer needs are made the priority and this vision is used to appropriately direct business
practices.
• There are cost advantages to be achieved that help the organization become more competitive in
its industry
• A strategic view of all operational processes is taken with relevant questions being asked about
the established way of work and how it can be developed over the long term into more efficient
business practices
• There is a willingness to look beyond tasks and traditional functional boundaries with focused
outcomes. Through this, entire processes can be eliminated or amalgamated into fewer but more
relevant and powerful processes throughout the organization.
• There is a real desire to simplify the way of work by objectively assessing all activities and tasks
and eliminating any that add less value and more complexity.

A BPR program will fail if:

• It is seen as a way to make minor adjustments and improvements to existing processes. If there is
no clear willingness to put all existing process onto the chopping block, there is no chance of
success
 • It is seen as a one-time cost cutting exercise. In reality, cost reductions are often a handy by
product of the activity but not the primary concern. It is also not a one-time activity but an ongoing
change in mindset
• There is no success in gaining dedicated long-term commitment from management and the
employees. Bringing people onboard is a difficult task and many BPR initiatives never take off
because enough effort is not put into securing support
• There is less effort to redesign and more to automate
• One department is prioritized at the expense of the process. There needs to be an openness
towards studying every single process in detail and a willingness to change whatever is needed to
achieve overall efficiency
• There is too much internal focus and not enough of an eye on the industry and what competitor
best practices can be used as benchmarks

Disadvantage:

A. Resistance to change BPR require adjustment, and the adjustment is the overall of the entire
organization. Not all employees are psychologically prepared for the changes in the company. There are
employees who are unwilling and resist to adjustment because of fear, mistrust, and loss of job security.
The unwillingness to change by the employee, will resulting the risk of failure in BPR. Some workers may
not be able to fully adapt the changes, and those employees that receive and assigned to different job
role can become overwhelmed. Other workers become unproductive if the main function is removed and
as part of a process changes and redesign Management must provide support and guidance during BPR.
If the top management fail to guide and assist workers and set an example during the BPR process may
lead to failure and other negative consequences.

B. Higher Demands to the Workers Empowering the workers is an unavoidable approach in a re-
engineered process. Therefore the companies which hire new workers have to consider additional criteria
in their hiring .This might be more complicated to find the right people for one specific job. The worker
has to be a kind of “All-rounder” which can perform several jobs.

Advantage:

a. Satisfaction-A big advantage of reengineering is that the work becomes more satisfying because the
workers get a greater sense of completion, closure, and accomplishment from their jobs. BPR revolves
around customer needs and helps to give an appropriate focus to the business to improve the satisfaction
of customer, employee and supplier.

b. Solidarity to the Company – According to Hammer and Champy 2001, the re-engineered process will
contribute to company in focusing matter that is the company can spend more time on value adding work
and less on process that adds no value to the product.

c. Maintain competitive advantage – Each company will have their own competitive advantage that able
to outperform their rivals, With the BPR implemented, the value added activity will be given more time.