ACCA Strategic Professional · Strategic Business Leader · The internal resources, capabilities and competences of an organisation
Keswick Foods buys fruit from growers, processes it into juices, and sells through supermarkets. Its board wants to find where it can gain cost advantage. A consultant proposes analysing each activity in the value chain by identifying the cost drivers and comparing cost and value contribution against rivals. What is the main purpose of this analysis?
The purpose is to identify which activities create value relative to their cost, so management can find sources of cost advantage or differentiation. Splitting the business into activities and comparing them with rivals shows where costs can be cut or value enhanced.
- ATo identify which activities create value relative to their cost, and so where competitive advantage or cost reduction may ariseCorrect
- BTo measure the market share of each product in each segment
- CTo determine the optimal capital structure of the business
- DTo forecast the stage of the product life cycle for each product
Explanation
Value chain analysis breaks the business into activities to see which add value and which cost more than they contribute, relative to competitors. This reveals sources of cost or differentiation advantage. Market share, capital structure and life cycle are different tools.
Did you get it right without looking?
One question tells you little. A timed set on The internal resources, capabilities and competences of an organisation shows your real accuracy, how long you take and where you lose marks.
More The internal resources, capabilities and competences of an organisation questions
- Corvane Pharma has a patented drug formulation process, a skilled research team and strong brand recognition. A consultant says that, to be …
- Tessaro Motors can match rivals on safety certification, dealer coverage and warranty terms, which all car makers must offer to compete. Whi…
- Brindle Telecom has invested heavily in a network of base stations, a customer database and a billing system. A strategy review finds that a…
- Ostrander Pharma wants to assess whether its research capability is a threshold capability or a unique resource. Which test best identifies …
- Calder Foods has a patented fermentation process that is valuable, rare and costly for rivals to imitate. The company has a well-staffed R&D…
- Ostrava Components compares its machine downtime, defect rate and cost per unit across its four factories to identify which plant has the be…