Question

In creating value chains, which of the following is a primary goal?
A. The assurance of hoarding inventories to prevent stock-outs

B. The maximization of gross margins allocated across channel members C. The impediments to fluidity in the distribution flows in the value chain

Answer 1

A value chain shows the activities required to deliver value to the customer. A value chain is the full range of activities – including design, production, marketing and distribution – businesses conduct to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials used to make their products, and consists of everything added before the product is sold to consumers.

Value chain analysis focuses on analyzing the internal activities of a business in an effort to understand costs, locate the activities that add the most value, and differentiate from the competition. To develop an analysis, Porter's model outlines primary business functions as the basic areas and activities of inbound logistics, operations, outbound logistics, marketing and sales, and service. The model also identifies important support activities of firm infrastructure, human resources management, technology, and procurement.

Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They consist of the following:

• Inbound logistics – These are all the processes related to receiving, storing, and distributing inputs internally.
• Operations – These involve transforming inputs into final product form.(e.g. machining packaging, assembly, equipment maintenance, testing ,facility operations.)
• Outbound logistics – These activities involve distributing the finished product to your customer. These are things like finished goods warehousing,material handling,delivery vehicle operation ,order processing and scheduling.
• Marketing and sales – These are the processes you use to to induce and facilitate buyers to purchase the product.(eg. advertisig, sales force, channel selection )
• Service – These are the activities related to maintainingor enhancing the value of your product or service to your customers, once it's been purchased.(e.g. installation, repair, parts supply and product adjustment)

So, since option A of hoarding inventories seems to be part of inbound logistics (receiving,storing,material handling,warehousing, inventory control);we can say it is one of the primary goals while creating a value chain for a firm.

Hence, OPTION A is the answer.