ACCA Applied Knowledge · Business and Technology · Competitive factors
Which of the following is a recognised benefit to an organisation of analysing its activities using the value chain?
Value chain analysis lets an organisation examine each of its activities to identify where it adds value or where costs can be reduced. This supports a strategy of cost leadership or differentiation. It does not guarantee success, measure financial ratios, or remove the need to compare against competitors.
- AIt identifies which activities add value or can be reduced in cost to build competitive advantageCorrect
- BIt guarantees that the organisation will become the market leader
- CIt measures the organisation's liquidity and gearing
- DIt replaces the need to analyse competitors' activities
Explanation
Value chain analysis helps managers examine each activity to find where costs can be cut or value enhanced, supporting cost leadership or differentiation. It does not guarantee leadership, measure financial ratios, or remove the need to benchmark against competitors.
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