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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment

Anita Foods, a Pune packaged-snacks company, finds that its distribution network, procurement and customer service all cost less than rivals' and the savings are passed to customers. Which activity category in Porter's value chain includes procurement?

Procurement belongs to the support activities in Porter's value chain. Support activities are procurement, technology development, human resource management and firm infrastructure. Primary activities cover inbound logistics, operations, outbound logistics, marketing and sales, and service.

  1. APrimary activities
  2. BSupport activitiesCorrect
  3. CInbound logistics only
  4. DMargin

Explanation

Porter's value chain splits activities into primary (inbound logistics, operations, outbound logistics, marketing and sales, service) and support (procurement, technology development, human resource management, firm infrastructure). Procurement is therefore a support activity. Inbound logistics concerns receiving and storing inputs, not purchasing as a function.

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