Value Chain Management For Twizza Soft Drinks

Value Chain Theory

Discuss about the Value Chain Management for Twizza Soft Drinks.

Twizza Soft Drinks is a leading soft drink and beverage company of South Africa. It was founded in 2003 by Ken Clark to establish a state-of-the-art carbonated soft drink line. In a few years, the production of the company surpassed other local competitors and it became one of the leading cold drink manufacturing organizations of South Africa (Twizza, 2017). The company has attained substantial market share due to its qualitative products with the local South African taste. In this regard, in this report, the major value creating activities of the company are determined with the help of Porter’s value chain analysis.

The value chain theory analyzed the business processes to examine the most value creating activities of the organization. It provides a better understanding of the business activities through which the firm develops competitive advantage and establishes shareholders value. The value chain theory states that there are some generic activities found common to large number of firms which can be used to examine the value generating activities of an organization. The Porter’s Generic Value Chain model divides the value creating activities of an organization into different segments. The notion behind the value chain model is to represent the manufacturing process or the services of an organization into several subsystems in which each system has its own input, transformation process and an output (Porter, 2008). The input process refers to the acquisition of different resources such as human labor, finance and raw material. Later the raw materials are modified and transformed into company-finished goods. 

The value chain analysis is significant for an organization to attain a greater value of the product than the original cost of manufacturing them. The manufacturing companies create value by acquiring raw materials and manufacturing them into an end product. The organizations use numerous strategies such as providing customer service and other value creating activities to capture value. The value creating activities of an organization are divided into primary activities and secondary activities.

The primary value chain activities of an organization are:

Inbound Logistics: The inbound logistics refers to the relationship with the suppliers. It involves activities such as receiving, storing and distributing the inputs within the organization (Hill and Jones, 2012). For Twizza Soft drinks, the primary raw material used in the manufacturing of the soft drinks is water. It is easily available to the company; however, other raw materials such as sugar syrup and flavors have to be exported or manufactured within the company. The company has to focus on the manufacturing process of these products as it provides flavor to the beverage and is directly associated with the sales of the company (Twizza, 2017).

Primary Value Chain Activities

Operations: It encompasses all the activities of the organization which transforms the raw materials into outputs or manufactured products. In South Africa, there are several different operations of the organization that contribute to the value of the organization. It involves manufacturing, distribution, marketing and maintaining brand image of the organization. It also includes packaging, merchandizing and marketing activities (Wiedemann, 2013). The company follows stringent quality standards such that the manufactured products meet the quality standards of the international brands (Twizza, 2017).

Outbound Logistics: The outbound logistics refers to all the activities which are used to store and distribute the manufactured products to the customers. The outbound logistics activities of an organization refer to the distribution of the manufactured products to the shops. The company transports the wooden crates of the cold drinks to the shops and restaurants situated in different corners of the nation. Over the years, it has also expended the manufacturing capacity by opening a second facility in 2012, in Middleburg. The first facility is situated in Queenstown site in South Africa (Twizza, 2017).

Marketing and Sales:  The marketing is an integral function of the business organizations. In this value creating activity, the business organizations advertise their products and services and attract them to buy the products of the organization (Taylor, 2008). It has implemented several marketing and advertising campaigns to increase its market share. The main themes of the advertising campaign include local taste, music, flavor and fun. Its official advertisement partner is Algaa FM in South Africa (Twizza, 2017).  

Service: In the present business scenario, the customer service is considered as one of the most significant activity of an organization. It involves providing proper services to the customers so that all their queries and issues are solved. It also includes the services provided to the customers to keep the product running (Levy and Powell, 2004). The company focuses on customer service and the customers can contact the company on its customer service number, Facebook and Twitter page. The officials of the company are dedicated to give prompt responses and resolve all the queries of the customers (Twizza, 2017).  

In the value chain model, the other activities of the organization are categorized as secondary activities. These secondary activities support the primary activities of the organization and play a significant role in the accomplishment of the primary activities. The secondary activities of the organization are: 

Procurement: The procurement refers to process and the strategies to get the required resources and assets in the operations. It relates to finding suppliers and negotiating prices with them and obtaining the raw products at desired quality and price.

Secondary Value Chain Activities

Human Resource Management: The human resource management refers to the management of the workforce in the organization. It refers to the recruitment, hiring, training and the performance management of the employees. The companies with a talented workforce have a significant advantage over other competitors (Ireland, Hoskisson and Hitt, 2012). The management of the company is focused on recruiting and selecting the talented workforce for the operations of the company.

Technological Development: The technological development activities refer to the integration of technology in the operations of the organization to increase the efficiency of the organization. It refers to the use of technology for management and processing of the information and using technological excellence for the value creation activities of the organization. It has implemented several technical solutions to increase its efficiency and competence in energy saving. The Middleburg factory has implemented solutions to become 25% more efficient in power (Bidgoli, 2010).

Infrastructure: The infrastructure refers to the basic physical or tangible facilities of the organization that supports all the organizational activities (Baum, 2012). It has state-of-art manufacturing facilities and has integrated technology in its infrastructure to increase the overall operations of the company.

The flow of activities and materials in the value chain of the soft drink and manufacturing activities is presented in the below section:

In the above diagram, the value creating activities of Twizza Soft Drinks are presented. In this diagram, it is stated that the value creating activities of the organization begins with procurement of the water, syrup producer and other raw materials. In the procurement process, the management and the front line staff of the organization has to assure that the raw materials are attained at the best market price and abide by the quality standards. The company places special focus on the quality of the manufactured products; therefore, abiding by the quality standards is necessary for the organization.

These raw materials are combined in the manufacturing facility of the organization which is supported by the infrastructure and the HR resources of the organization. Twizza Soft drinks has implemented advanced techniques for the preparation of the cold drinks, their manufacturing, processing and packaging. This approach allows the organization to save cost and expenditure to the organization and create high quality products.

The next activity in the value chain flow of the organization is distribution of the raw materials. The distribution of the raw materials is dependent upon the technology and the HR resources of the organization. The company has adopted different distribution channels and strategies so that the manufactured products can transfer to different corners of the nation. It has made strategic alliance with a number of local distributors to increase its efficiency in the distribution of the products. The end-consumers buy these products from the local merchants (Margretta, 2012).

In these value creating activities, the marketing of the organization is also significant. The marketing refers to the establishing a brand image of the organization in the perception of the consumers. The marketing is also essential in increasing the customer base of the company and attracting new customers. In this regard, it can be stated that the company follows stringent marketing methods wherein it promotes its products through series of advertising campaigns in broadcast channels. It promotes the products through newspapers, television and radio FM.

Conclusion

Value chain activities are essential in identifying the role of different processes in the value creation of the products of the organization it is also important for the optimizing the business processes of the organization. In this regard, the value chain activities of Twizza Soft Drinks are discussed in the present report. It can be concluded that different activities of the organization has significant impact on the value creation of the end product. The primary activities in the value creation are inbound and outbound logistics, operations and marketing. The supporting activities are procurement, technology, infrastructure and the human resources.

References

Baum, M.B. 2012. Service Business Costing: Cost Accounting Approach for the Service Industry. Springer Science & Business Media.

Bidgoli, H. 2010. The Handbook of Technology Management, Supply Chain Management, Marketing and Advertising, and Global Management. London: John Wiley & Sons.

Hill, C.W.L. and Jones, G.R. 2012. Strategic Management Theory: An Integrated Approach. Cengage Learning.

Ireland, R.D., Hoskisson, R.E. and Hitt, M.A. 2012. Understanding Business Strategy Concepts Plus. Boston: Cengage Learning.

Levy, M. and Powell, P. 2004. Strategies for Growth in SMEs: The Role of Information and Information Sytems. Butterworth-Heinemann.

Margretta, J. 2012. Understanding Michael Porter: The Essential Guide to Competition and Strategy. Harvard Business Press.

Porter, M.E. 2008. Competitive Strategy: Techniques for Analyzing Industries and Competitors. Simon and Schuster.

Taylor, D.I.W. 2008. Measuring Intangible Value: A Practical Method to Measure the Intangible Elements of Any Investment Decision. iUniverse.

Twizza. 2017. About Us. [Online.] Available at: https://www.twizza.co.za/About-Us {accessed on: 24 February 2017].

Wiedemann, L. 2013. Business Strategies and Value Chain Management. Author House.