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

Kavya Foods plans to enter a new region. Its managers list the activities that create value for the customer, such as inbound logistics, operations, outbound logistics, marketing and sales, and service, together with support activities like procurement and HR. Which tool are they using to find the source of cost or differentiation advantage?

They are using value chain analysis. It divides a firm's activities into primary ones such as inbound logistics, operations, outbound logistics, marketing and service, and support ones such as procurement and HR, to locate where cost or differentiation advantage is created. The other tools examine portfolios, industry forces or the macro environment.

  1. ABCG growth-share matrix
  2. BPorter's Five Forces
  3. CValue chain analysisCorrect
  4. DPESTLE analysis

Explanation

Value chain analysis splits the firm into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (procurement, technology, HRM, infrastructure) to find where cost or differentiation advantage arises. BCG matrix classifies business portfolios, Five Forces examines industry structure, and PESTLE scans the macro environment.

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