Skip to content

IAI Actuarial Core Principles · Business Management · Business and consumer needs, the industry value chain and competitive forces

An Indian asset manager's analysts map its activities in Porter's value chain. It spends heavily on a proprietary research platform, on recruiting and training fund managers, and on negotiating technology licences centrally for the whole group. Which of these is correctly classified as a primary activity rather than a support activity?

Operating the fund management and portfolio execution process is the primary activity. It directly produces and delivers the service. Recruiting and training, platform development, central licence negotiation and legal or finance infrastructure are support activities in Porter's value chain, since they enable rather than directly deliver the service.

  1. AOperating the fund management and portfolio execution processCorrect
  2. BRecruiting and training fund managers
  3. CDeveloping the proprietary research platform
  4. DNegotiating technology licences centrally
  5. Maintaining the group's legal and finance infrastructure

Explanation

Primary activities directly create and deliver the product or service, such as operations. Recruitment and training are human resource management, the research platform is technology development, licence negotiation is procurement and legal and finance fall under firm infrastructure. All of these are support activities.

Did you get it right without looking?

One question tells you little. A timed set on Business and consumer needs, the industry value chain and competitive forces shows your real accuracy, how long you take and where you lose marks.

Practise Business and consumer needs, the industry value chain and competitive forcesFree diagnostic mock

More Business and consumer needs, the industry value chain and competitive forces questions