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

Anvika Foods, a packaged snacks maker, decides to hand over its distribution to a specialist logistics firm so that it can focus on product development and branding. In Porter's value chain terms, what is Anvika changing?

Anvika is outsourcing outbound logistics, which is a primary activity in Porter's value chain. By handing distribution to a specialist, it concentrates its own resources on activities such as product development and branding where it expects to add more value. This is a value chain decision, not an industry or portfolio one.

  1. ASupport activity ownership by outsourcing primary outbound logisticsCorrect
  2. BThe industry's five forces
  3. CIts core product to a new market segment
  4. DIts BCG portfolio position

Explanation

Outbound logistics is a primary activity in Porter's value chain. Handing it to a specialist outsources that activity so the firm can concentrate on others such as marketing and R&D. It does not alter industry forces, market segment or BCG position.

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