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

Kaveri Foods compares its cost of procurement, production and distribution with a rival, activity by activity, and finds its outbound logistics costs are much higher. It then studies how the activities link together to create margin. The framework used is best described as:

The framework is Porter's value chain analysis. It splits the firm into primary and support activities, compares their costs with a rival and examines linkages between them to locate sources of cost or differentiation advantage. The other options address portfolio, growth or external environment, not internal activities.

  1. APorter's value chain analysisCorrect
  2. BBCG growth-share matrix
  3. CAnsoff product-market grid
  4. DPESTLE analysis

Explanation

Breaking a firm into primary and support activities, comparing costs and studying linkages to find sources of margin and cost advantage is value chain analysis. BCG and Ansoff deal with portfolio and growth choices, and PESTLE analyses the external environment.

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