Value chain analysis to improve corporate performance: a case study of essential oil export company in Indonesia

Abstract

The purpose of this paper is to analyze the value chain, the main activities, and supporting activities as well as cost driver activity of one essential oil export company in Central Java. This research is a case study using the survey method (ex post facto). Primary data were collected by in-depth interviews and FGD (Focus Group Discussion). Secondary data were taken from natural materials purchasing department and finance department and controlling. Based on the research, the authors found that the main activity of the company consists of Supply, Purchasing/Procurement, Production Planning, Manufacturing, Materials, Quality Control (QC), Research and Development (R & D), Sales and Marketing and Customer activities. While supporting activities (support) consist of Personal and General Affair (P & GA), Information Technology (IT), Administration, Quality Assurance (QA) and Maintenance activities. Based on the value chain analysis (VCA), the company has Purchasing and R & D activities as the main activity of which is a characteristic that distinguishes the generic value chain of Porter. Purchasing a company with a cost driver activity expenditure composition of 85.6%. Clove oil is the dominant raw material of 78.26%. Based on this research, the authors, then, put forward some suggestions as follows: firstly, doing further research with the identification and analysis of internal and external factors, in order to know the internal strengths and weaknesses, opportunities and threats faced by the company. Second, analyzing company’s competitive position and the selection of alternative strategies to formulate strategies that can enhance the competitive advantage of companies. Keywords: value chain analysis, main activity, supporting activity, cost driver. JEL Classification: M21, M41

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“…argues that a company's business is best described as value change. Managers can win the competition by targeting elements of the value chain through their company for specific purposes (Sutarmin, 2016).…”

“…The main tool is the construction of an impact matrix that allows identifying impacts of the chain on the environment (Springer-Heinze, 2018a, 2018b). (IV) The social and poverty analysis focus on the vulnerable groups that do not have access to safely managed sanitation services and how the chain can use to provide these essential services to the poor of the society Sutarmin, 2016).…”

Re-conceptualizing the sanitation value chain

“…Porter (1985) argues that a company's business is best described as value change. Managers can win the competition by targeting elements of the value chain through their company for specific purposes (Sutarmin, 2016).…”

“…The main tool is the construction of an impact matrix that allows identifying impacts of the chain on the environment (Springer-Heinze, 2018a, 2018b). (IV) The social and poverty analysis focus on the vulnerable groups that do not have access to safely managed sanitation services and how the chain can use to provide these essential services to the poor of the society (Springer-Heinze, 2018a, 2018bSutarmin, 2016).…”

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