Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 30

Value Chain; Choosing Which Activity A factory owner in Bangladesh, Tipu Munshi, manufactures clothing for Walmart and other retailers around the world. One of Tipu's products is a pair of jeans sold to Asda, a Walmart subsidiary in Britain, which sells the jeans for $US 22.12. Asda Stores Ltd. is the third-largest retailer in the UK, focusing on food, clothing, and general merchandise. Tipu completes each set of jeans at an average cost for materials, labor, and factory costs and $0.26 profit for a total of $7.29 each. The jeans are then shipped to Asda by Li Fung, a Hong Kong company, for $4.33 per pair. Finally, the Asda store adds an additional $10.50 of cost and profit, thus arriving at the selling price of $22.12 per pair of jeans.
Required Identify the value chain for the Asda jeans. As a manager at Asda, explain how you would use the value chain to improve the competitiveness and profitability of the business.