Butterfly Edufields: Value Chain Reconfiguration
(6 pages of text)
Based in India, Butterfly Edufields Pvt. Ltd. (BFF) designed, developed, assembled, and distributed educational activities and games for Grade 1–10 students to help them understand various science, technology, engineering, and mathematics (STEM) concepts. After more than a decade of existence, BFF had grown significantly in terms of production capacity, human resources, product portfolio, and geographical reach. Between 2010 and 2019, its revenues had grown 15 times. In November 2019, the company's chief executive officer faced three challenges: (1) the firm's inability to meet orders for newly introduced products; (2) its limited ability to tap and serve the huge market of 1.5 million schools across India; and (3) its failure to capture the enormous potential of selling educational toys online—a $300 million market. The chief executive officer believed that the traditional cost structure of centralized design, production, and distribution might not support the non-linear growth he envisaged for the company, so he had collected the value-added details for one of BFF's products with the intention of evaluating alternate value chain configurations for the company.
This case can be used in graduate-level courses on manufacturing or operations strategy, while discussing growth through alternative forms of value chain configurations. It can also be used by graduate- or executive-level students in courses on strategic management, management control systems, or outsourcing. The focal organization is at a strategic juncture, and it needs to critically review its value creation process in an attempt to understand the relative benefits of handling tasks in-house or by external partners in order to best capture growth opportunities. After working through the assignment questions, students will be able to do the following:
- Describe the value creation process of an organization.
- Outline the advantages and disadvantages of in-house production versus outsourcing.
- Apply the value, rarity, imitability, organization (VRIO) framework to recommend production steps for potential outsourcing.
- Describe partner management and control systems.
- Explain non-linear growth enablers.
- Compare and contrast serving institutional customers with serving individual customers.
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