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ACCA Strategic Professional · Strategic Business Leader · E-business: value chain

Tessaro Ltd, a furniture manufacturer, has adopted an e-business platform. Orders placed by customers online now flow automatically into the production scheduling system, and the same platform sends dispatch updates to customers. Management says the benefit comes from the links between order handling, operations and outbound logistics rather than any single activity. Which feature of Porter's value chain does this describe?

The scenario illustrates linkages between value chain activities. Porter argued that coordinating activities, such as order handling, production and outbound logistics, can lower cost or increase customer value, and e-business systems that share data across them exploit those linkages to create competitive advantage.

  1. ALinkages between activities that can create competitive advantage through coordinationCorrect
  2. BThe margin, being the difference between value created and cost of activities
  3. CSupport activities, which add value only to the firm's infrastructure
  4. DThe value system, linking the firm only with its competitors

Explanation

Porter stressed that advantage often arises from linkages between activities, where optimising or coordinating one activity reduces cost or raises value in another. Integrated order, production and dispatch data is such a linkage. The margin and value system concepts are different ideas and do not describe this coordination.

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