CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
Kaveri Appliances finds that its cost of operations is lower than rivals' but its customers complain of slow installation and repair. Using value chain analysis, what is the most appropriate step?
Kaveri should examine and strengthen its service activity. Value chain analysis pinpoints weak links, and installation and repair complaints point to service, not operations. Operations is already a cost strength, so more cost cutting there would not fix the customer issue.
- ACut the operations cost further because it is already a strength
- BExamine and strengthen the service activity, where the weakness liesCorrect
- CDrop procurement since it is a support activity
- DIgnore the complaints because primary activities are already efficient
Explanation
Value chain analysis identifies each activity's strength or weakness. Installation and repair belong to the primary activity of service, which is the weak link. Further cost cutting in operations addresses an area that is already a strength and leaves the customer problem unsolved.
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