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5.4 Structure

5.4.1 Concept

In the St. Gallen Model the structures (structural and process organisation) are the second element of order alongside strategy, as the specific provision of services is performed via structures—and their optimum configuration can also be used to gain a competitive advantage over rivals. Structural organisation consists of permanent organisational units such as positions and departments and forms the hierarchical framework of an organisation. It defines the framework conditions: Who bears what hierarchical responsibility? Who has what decision-making competence? Process organisation regulates the working and information processes: Who contributes which steps towards providing the service? The focus of this process-oriented organisation is the optimum satisfaction of the customer's needs with an efficient use of resources and, where possible, without any interface problems. Communication and coordination when providing the service package runs vertically.

The concept of the value chain analyses the individual phases of a company's provision of services and identifies potential cost or differentiation advantages that might be reached based on the configuration of different activities in the context of the operational service-provision process (Porter 1985). The value chain is composed of two different types of activity:

• Primary activities: these are directly involved in the provision of the service.

They are also known as business processes or central value-creation processes: this is where the key market-related activities are carried out. These are customer processes: customer acquisition and loyalty, brand leadership. They also include market research, market processing, the development and intensification of customer relations management (CRM);

a. Provision of services (procurement, logistics, production) and

b. Service innovation (life cycle management, research and development).

• Supporting activities: these take care of the operational environment in which the primary activities are carried out. Supporting activities are, on the one hand, management processes—all fundamental management tasks that are concerned with planning, guidance, control and development within the organisation. On the other hand they are also support processes—securing the infrastructure; providing internal services that are necessary to complete the business processes (HR, infrastructure, IT, communication, risk management, law).

The added value created by the bank is measured on the amount that the customer is willing to pay for the service. A profit margin results when this amount is higher than the costs. Competitive advantages arise either through a cheaper or a more differentiated execution of the activities, which allow a greater margin (Porter and Millar 1995; in detail Porter 1985).

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