Bed & Breakfasts in Italy: The case of the Emilia-Romagna Region
Alma Mater Studiorum
Università di Bologna
School of Economics Management and Statistics
Second Cycle Degree Programme in Tourism Economics and Management
Relatore: Manuela Presutti
Anno Accademico: 2015/2016
3.3.1 - Value Chain
‘Value Chain’ is a term that was used for the first time by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization performs and links them to the organization’s competitive position. Analyzing our value chain is useful to identify which value is added by each particular activity to our products and services, defining the competitive strengths of Villa Teresa. The value chain is composed by two kinds of activities:
- Operations are the transformation activities that, starting from inputs, lead to the outputs sold to customers. Here, our operational system create value, in other words everything we do for serving the customers as they deserve.
- Sales & Marketing (including also outbound logistics) involves all the efforts that try to arouse potential customers’ interest in the structure and the way in which the services and final products are offered and distributed to different guests, according to their specific needs. Specifically, this particular activity involves the promotion of the B&B exploiting new age technology, PR, and social media: having a highly interactive and updated website and Facebook page is one of our selected promotion strategies.
- Services are represented from all the procedures and processes that, with the support of the technologically advanced equipment and tools, will create goods and services to be offered on the market. The rooms, the aperitivi, the swimming pool, and the numerous agreements with theme/amusement parks create a full range of products that will stimulate potential customers’ interest. The “small” size of the B&B lets us take care of the guests in a highly personalized way. The laid-back, friendly environment is fundamental to mark out against the competitors.
- Infrastructure includes our B&B’s support systems, and the functions that permit daily operations to be maintained. Accounting, legal, administrative, and general management are examples of necessary infrastructure that our business will use properly. Company culture is also part of the infrastructure of the firm and that is probably the element that will bring the most value.
- Human resource management will not represent an issue for us since the people who will constantly work in the structure will be my mother and I (and we will have a gardener come every week). We are a significant source of value, because we both love hosting people, we are kind, friendly, and professional at the same time. By the opening of the B&B, I will be graduated in “Tourism Economics and Management”, and that will for sure add credibility to our service. Besides, we always try to stay updated on new trends emerging in the market.
- Technology development relates to managing and processing information, which we will do in the most efficient way, trying to minimize information technology costs and staying current with technological advances.
Villa Teresa’s margin, then, depends on its effectiveness in performing the described activities in an efficient way, so that the amount the customer is willing to pay for the service exceeds the cost of the activities in the value chain. The value chain model was useful to this research for defining our business’ core competencies and the activities in which we can pursue a competitive advantage by better understanding costs and squeezing them out of the value-adding activities.