ACCA Strategic Professional · Strategic Business Leader · Concepts of strategy
Dunmore Hotels wants to understand how its activities create value. It maps inbound logistics, operations, marketing, service and support activities such as procurement and human resource management, and then compares the cost and value of each activity to rivals'. Which tool is Dunmore using, and what is its main purpose?
Dunmore is using Porter's value chain. By mapping primary and support activities and comparing their cost and value with rivals, it identifies which activities create margin and where competitive advantage can be built or improved. The other tools address industry structure, growth options or portfolio balance.
- APorter's value chain, to identify activities that create margin and competitive advantageCorrect
- BPorter's five forces, to assess industry attractiveness
- CThe Ansoff matrix, to select a growth direction
- DThe BCG matrix, to balance the portfolio of businesses
Explanation
Mapping primary and support activities and comparing their cost and value with rivals is value chain analysis. Its purpose is to find where the organisation creates margin and where advantage can be built. Five forces assesses the industry, Ansoff growth options and BCG the portfolio.
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