MA – L2 – Q5 – Decision Making Techniques

List value chain activities, explain their strategic importance, and identify primary activities for a publisher and an insurance company.

Question

5 VALUE CHAIN

(a) List the primary activities and secondary activities in a value chain.

(b) Explain the significance of the value chain for business strategy.

(d) Identify the primary activities in the value chain for a company selling insurance policies (such as car insurance) by telephone.

Answer

(a) Value chain activities

Primary activities	Secondary activities
Inbound logistics	Procurement
Operations	Human resource management
Outbound logistics	Technological development
Marketing and sales	Infrastructure (general management, accounting etc)
Service (after sales)

(b) Companies compete with each other, and their relative success depends on their ability to add value throughout their value chain.
Companies should try to develop strategies that add value. They should look at each activity in the value chain and consider whether it can be improved to add more value.
A company can also assess its performance by looking at its ability to add value in each part of the value chain (each primary activity and each secondary activity).

(c) Primary activities:
(i) Publisher or author thinks of the idea for a book. The material is written or assembled.
(ii) The publisher edits what the author has prepared.
(iii) The text is prepared for printing
(iv) Printing
(v) Warehousing and distribution of books
(vi) Sale of books to intermediaries (bookshops) or direct (schools, colleges and universities
After-sales service: taking back returned (unsold) copies
Emil Wolf Global
87
Institute of Chartered Accountants, Nigeria

(d) Primary activities

Inbound logistics	Operations	Marketing and sales	After-sales service
Managing incoming calls: call systems	Taking calls	Obtaining customer information	Handling claims
	Providing price quotations quickly	Targeting customers	Detecting fraudulent claims
	Cheap prices for insurance policies	Advertising and other forms of marketing	Settlement of successful claims

Emil Wolf Global
87
Institute of Chartered Accountants, Nigeria

Tags: Business Strategy, Insurance, Primary Activities, Publishing, Secondary Activities, Value Chain
Level: Level 2

Topic: Decision making techniques

Uploader: Salamat Hamid