CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Value chain includes the activities that take place within a company in order to deliver a valuable
product or service to their market. Each stage of the value chain adds more value. The value chain
provides a tool to visualize a firm's productivity by identifying the thousands of discrete activities
involved. Value chain refers to the functional activities of a business that add value to its customers. An
organization must use its value chain activities to create value, and then capture that value. The value
created by this chain should exceed the sum of the values added by each individual activity. The
purpose of value-chain analysis is to increase production efficiency so that a company can deliver
maximum value for the least possible cost. A supply chain is a network between a company and its
suppliers to produce and distribute a specific product to the final buyer. The supply chain also
represents the steps it takes to get the product or service from its original state to the customer. A
supply chain is comprised of all the businesses and individual contributors involved in creating a
product, from raw materials to finished merchandise. Examples of supply chain activities include
farming, refining, design, manufacturing, packaging, and transportation. A supply chain starts with the
delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished
product or service to the end consumer. SCM oversees each touch point of a company's product or
service, from initial creation to the final sale.

A profitable value chain requires connections between what consumers demand and what a
company produces. Value chains place a great amount of focus on things such as product testing,
innovation, research and development, and marketing.

The concept of “value chain” was introduced by Porter (1985) to describe the full range of
activities, which are required to bring a product or service from conception, through the different phases
of production, distribution to consumers, and final disposal after use. As the product moves from one
player in the chain to another, it is assumed to gain value (Hellin and Meijer, 2006). As such, the value
chain can be used as a tool to disaggregate a business into major activities, thereby allowing the
identification of sources of competitive advantage (Brown, 1997). This concept has, over the years,
been the object of a fast-growing literature in economics and management (Abecassis- Moedas, 2006).
Value chain analysis has been employed to examine and evaluate entire industries and industry
clusters, as well as specific systems within firms. It has likewise been employed to examine activities
that are increasingly spread over several countries or the so-called “global value chain” (GVC). This
segment of the value-chain literature is also known as global commodity chains, global production
networks, or international supply chains (Sturgeon, Linden, and Zhang, 2012). GVC defines economic
upgrading “as a shift to higher-value-added products, services, and production stages through
increasing specialization and efficient domestic and international linkages” (Ernst, 2004); and it
emphasizes the importance of international linkages to create cross-border forward and backward
linkages such as international knowledge linkages that compensate for the narrow base of domestic
knowledge (Lall, 1997; Ernst, 2004). Recently, this aspect of the literature has been extended to
examine whether economic upgrading, especially by global firms, necessarily leads to social upgrading
which is defined as the “improvement in workers’ rights and entitlements and enhancement of the
quality of their employment” (Lee, Gereffi and Barrientos, 2011).

The value chain is a organizational model developed by Porter focusing on cross-functional

orientation. Porter’s value chain model is structured by primary activities such as service, marketing
and sales, operations, and outbound and inbound logistics and support activities such as procurement,
technology development, human resource management and company infrastructure. Organizations
used to concentrate on the management within these individual functions instead of focusing on cross-
functional value chain optimization. Therefore, value chain management focuses on optimizing
volumes and values based on cross-functional management concepts and integrated decision making
throughout the value chain (Schulz et al. 2007).

A value chain is an organizational model that outlines all the steps involved in producing a good
or service (Laffont et al, 2016). A value chain for organization that manufacture things includes all of
the processes involved in taking a product from conception to distribution, as well as everything that
happens in between, such as sourcing raw materials, performing manufacturing tasks, and engaging in
marketing activities (Delta e Sourcing, 2022). A firm analyses its value chain by analyzing the specific
processes involved in each stage of its operations. A value chain analysis' goal is to boost production
efficiency so that a business can provide the most value for the least amount of money.

Value Chain refers to the range of activities that adds value at every single step in designing,
producing, and delivering a quality product to the customer. Value Chain Analysis is used to evaluate
the activities within and around the organization and relating to its ability to provide value for money,
goods, and services. The concept of Value Chain Analysis was first evolved by Michael Porter in 1985
in his renowned book “Competitive Advantage”. In his opinion, two major steps involved in the value
chain analysis are: Identification of individual activities Analyzing the value added in each activity and
relating it to firm’s competitive strength.
1.2 Statement of problems

Challenges within the global value chain could be lack of visibility within companies, chaos, inaccurate
research or forecast, human mistakes, mother nature, political situation and so forth. The global value
chain is a complex model with simultaneous flow of information and products . The right quantity of
products must be effectively delivered to the right place and the right customer. Globalization has made
the global value chain model more sophisticated and more vulnerable for all parties, with many
interruptions and disruptions on the supply chain network. Nataliya Smorodinskaya, Daniel Katukov &
Viacheslav Malygin (2021) presented a typical global value chain organizational model that can help
you understand various value chain activities, which each of them can be at risk and have challenges.

1.3 Objectives Of The Study

The broad objective of this study is to examine the value chain management and organizational
performance, a case study of UTCH. Other specific objectives are as follows:

1. To examine how value chain can create a competitive advantage for an organization
2. To determine how Value chains helps increase a business's efficiency in organization
3. To examine the role of value chain management in organizational performance
4. To analyze the challenges involved in value chain management in organizational performance

1.4 Research Questions

This following research questions were raised to guide the study:

1. How can value chain create a competitive advantage for an organization?

2. What are the impacts of Value chains in increasing a business's efficiency in organization?
3. What are the roles of value chain management in organizational performance?
4. What are the challenges involved in value chain management in organizational?

1.5 Statement of Hypotheses

1. H0: There is no significant effect of value chain in creating a competitive advantage for
an organization.

H1: There is a significant effect of value chain in creating a competitive advantage for an
organization.
 2 H0: There are no significant impacts of Value chains in increasing a business's efficiency
in organization.

H1: There are significant impacts of Value chains in increasing a business's efficiency in
organization.

3 H0: There are no significant roles of value chain management in organizational

performance.

H1: There are significant roles of value chain management in organizational performance.

4 H0: There are no significant challenges involved in value chain management in

organizational

H1: There are significant challenges involved in value chain management in organizational.

1.6 Significance of The Study

The justifications for conducting the study are:

 The study will be of immense importance to organizations, industries, government and

managers generally since it will give them insight on how to prioritize value chain management
with a view to improving organizational goal attainment

 The study will serve as input for future policy formulation and implementation by all levels of
organizations.

 The study is expected to contribute to the stock of knowledge on organizational high

performance and for future researchers, and as a reading material as well for students.

1.7 Scope of the Study

The study focuses on value chain management and organizational performance approach, a case
study of UTCH.

1.8 Limitations of the Study

The study was constrained by:
 Insufficient Funds: Inadequate funds affected the way data were collected since the researcher has
to travel for the distribution of the research questionnaire forms.
 Time Factor: This affected the reduction in size of the sample used for the study because the
researcher had only less than two months to complete the study
 Material Factor: Shortage of relevant materials for literature review posed a great difficulty, another
major problem was inability to retrieve all the questionnaire forms for good representation used for
the anticipated sample.
 The study was limited to the information gathered from primary and secondary sources.
 As an examination material at the HND level, it pages is restricted to at least 60.

1.9 Organization Of The Study

The study was organized into five chapters.
Chapter one focused on the introduction which was sub-divided into background of the study,
Statement of the Problems, Objectives of the Study, Research Question, Statement of Hypothesis,
Scope of the Study, and Limitation of the Study with Definition of Terms.
Chapter two reviews the related literature on the topic such as; Framework which is sub-divided
into: Conceptual Concept of Value Chain Management and Organizational goal in relation to value
chain management.
Chapter three is on Research Methodology, covering Research Design, Population of the Study,
Sample Size Determination and Sampling Techniques, Instrumentations, Method of Data Analysis and
Problems of Data Collection.
Chapter four deals with Data Presentation, Analysis andInterpretation, covering Analysis of
Research Questions, Test of Hypotheses and Discussion of Findings.
Chapter fives gives the Summary of Findings, Conclusion and Recommendations.
1.10 Definition Of Terms
Value Chain: A value chain is a series of consecutive steps that go into the creation of a finished
product, from its initial design to its arrival at a customer's door.
Chain: A chain business is comprised of a group of stores (two or more) that possess the same brand
name, adhere to the same corporate policies, sell the same products, and are all owned by the same
parent company.
Management: Management is the process of planning and organising the resources and activities of a
business to achieve specific goals in the most effective and efficient manner possible.
Organizational Goals: This can be defined as a target set by an organization to foster organizational
success.
Organizational Performance: Organizational performance is the ability of an organization to reach its
goals and optimize results.
Performance: Performance management is a tool that helps managers monitor and evaluate
employees' work. The goal of performance management is to create an environment where people can
perform to the best of their abilities and in alignment with the organization's overall goals.