Reference no: EM132359377

As discussed by Rothaermel (2017), a value chain is comprised of both support activities to include Research & Development, Information Systems, Human Resources, Accounting & Finance and basic infrastructure and primary activities to include as supply chain management, operations, distribution, marketing & sales and after sales services. Support activities add incremental value indirectly while primary activities add value directly by converting inputs into outputs as the service or good moves along the value chain Rothaermel (2017 and both are essential in conducting business. It is important to conduct internal analysis of both of these components in order to establish a competitive advantage via cost leadership or differentiation. In regard to the support activities, Flying Star maintains all components in-house which most definitely provides a benefit due to the intimate knowledge of the operations of the specific business aspects attributable to Flying Star. Although salaries are typically the largest component of a organization's expenses the high cost is often offset due to the buy-in and ownership of those directly employed by the organization as opposed to outsourcing these areas. When it comes to their primary activities Flying Star is very efficient. They have a strategic alliance with Rio-Chan foods which is a primary source of products for Flying Star. With this the cost of products is lower than outright purchases from other retailers.

By having a strategic alliance with a primary provider and retaining all other aspects of the business in house Flying Star achieves economies of scale simply by lower overall input costs from basic support to food supplies. This also proves to be their strength as with this they are able to retain company knowledge within their business. Thus, innovation and research and development are less likely to be imitated by competitors allowing for cost leadership and differentiation in the very competitive restaurant industry.

Reference:

Rothaermel, Frank. (2017). Strategic Management: Concepts 3e. New York, NY: Mc-Graw-