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

Dhruv Pharma has strong R&D, but its inbound logistics are inefficient, leading to stock-outs of raw materials. Its procurement team negotiates excellent supplier prices, and HR runs strong training. In Porter's value chain, which option correctly classifies these items?

Inbound logistics is a primary activity, while procurement, technology development (R&D) and human resource management are support activities. Porter's primary activities cover physical creation and delivery of the product, whereas support activities enable them across the whole value chain.

  1. AR&D and procurement are primary activities; inbound logistics and HR are support activities
  2. BInbound logistics is a primary activity; procurement, HR management and technology development (R&D) are support activitiesCorrect
  3. CInbound logistics and procurement are primary; R&D and HR are support
  4. DAll four are primary activities because they affect the product directly

Explanation

Primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are procurement, technology development, HR management and firm infrastructure. Option C wrongly treats procurement as primary, which is a common mix-up since it deals with inputs.

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