Strategic Management Midterm Guide Case Analysis Identify ● Vision: why we do what we do - our purpose , aspiration, hope ○ Ex. General Motors ● Mission: what do we do. ○ Automotive industry ● Business model: how do we make money ○ Sell vehicles ○ Finance vehicles ● Objectives: how we evaluate our progress ○ Quantitative and Qualitative ○ Upselling expensive cars to the point where people need to take out loans ○ Decreasing manufacturing costs ○ Manage risks - loans, ● Example: Western ○ Vision: destination of choice for world's brightest minds seeking the best learning ○ Mission: excellence in teaching and research ○ Business model: ○ Objectives: support (cultural, peer, health) Evaluate Porter’s 5 forces (porter 5 forces of soda stream carbonated beverage industry and recommendations on if it is attractive for Pepsi to acquire and why) Implications: high or low threat/ is industry attractive or unattractive for company, short why. Recommendations: Address the unattractive, what can do to make company more attractive? Pepsi example ● Threat of new entrants: threat of new players entering market ○ Hard to enter = low threat ○ Low threat is attractive ○ Lowthreat = high barriers to entry ○ Low: Already big players that make up 90% of market - high barriers to entry ■ Need volume to succeed ○ Apparel ■ Relatively high because new company would need to invest alot in marketing and branding to compete with already established companies - barrier to entry ■ Need brand awareness and loyalty to succeed may be hard, would say its unattractive ● Threat of substitutes : threat of substitute products ○ Alot of substitutes: high threat ○ High threat is unattractive ○ High threat of substitutes ■ Water, juice tea coffee ● Bargaining power of suppliers ○ ○ ○ Alot of suppliers for products you’re selling = low supplier power (you have options) Low supplier power is attractive Low bargaining power ■ Many suppliers of cans, sugar, labels, co2 ○ Auto ■ suppliers often have moderate to high bargaining power because automobile parts often have critical components such as engines, tires, and electronics and often have to meet precise specifications and safety standards. ■ Switching costs are high too ○ Apparel ■ High bargaining power, raw materials used to make clothing are pretty standardized, fabrics are common and not very unique, thus easy to find a supplier, ■ Switching costs are also low in apparel industry ■ 2 things that give us power: Choice and low switching costs ● Bargaining power of customers: how many alternatives and options do customers have to choose from? ○ Alot of options to choose from = more bargaining power ○ High customer power is unattractive for businesses ○ Power from the amount of choice and low switching costs ○ When customers have significant bargaining power, they can negotiate for lower prices, discounts, or better terms ○ Reduced brand loyalty ○ The final customers: gas stations, Walmart, stores, restaurants ○ High bargaining power: customers can decide whether they want to get into agreement with Coke or Pepsi/ any soft drink ■ Restaurants only serve one so there is high amount of power ■ Stores (Loblaws, Costco, Walmart) ○ Apparel ■ High power because we have significant influence over pricing pdouct choices, styles, preferences. ● Competitive rivalry: ○ More competition = unattractive because leads to price wards and reduced profitability ○ 2 big players so big competition - pepsi and coke Industry and Product Life Cycle Implications: What stage is this company in? Recommendations: What can they do based on the stage they’re in to drive sales and increase awareness 1. Introduction: when product reaches the marketplace a. Raising awareness- features and benefits i. Big advertising expenditures , lower prices ii. Operating at a loss iii. Ex. 3D TV’s, electric vehicles iv. High failure rate, little competition b. Promotion aimed at innovators and early adopters 2. Growth: a. Rising sales b. More attraction c. Starts to show a profit d. More competition (ex. iPhone led market) i. Ex.electric vehicles e. Product quality maintained and additional features added f. Pricing is maintained g. Distribution channels are added as demand increases h. Promotion is aimed at broader audience 3. Maturity a. Sales start to decline at end of this stage b. Slow growth, big competition, c. Discounts to attract customers i. Ex. washers and dryers, toothpaste (many necesity products at maturity stage will stay at this stage forever), soft drinks ii. If you want to grow at mature stage- must steal ideas from customers d. Refining and changing to keep relevant e. Product features are enhanced to differentiate product from competitors i. Pepsi offers sugar-free, lime Pepsi, diet f. Pricing may be lower bc of new competition g. Incentives may be offered to encourage preference over competition h. Promotion emphasizes product differentiation i. Different Types of cans, bottles ii. Sustainability*** i. 4. Decline a. Falling sales b. Exiting market c. As sales decline firms can: i. Maintain product and rejuvenate it by adding new features ● Baking soda - originally used for baking, can be used for cleaning (abrasive and absorbs oil) ii. Harvest product, reduce costs and offer to a loyal niche segment ● Vinyls iii. Discontinue product Driving forces- PESTLE Analysis (PEST analysis of soda stream carbonated beverage industry and recommendations on if it is attractive for Pepsi to acquire and why) On exam, examine each and decide whether it’s an opportunity (pos/will help/good) or a threat (bad/will not help/neg) for the industry → attractive future or unattractive future? What can we do to make the future more attractive or continue attractiveness? Implications: identify threats or opportunities/bad or can help the company? Recommendations: address threats and recommended decisions ● Political ○ Competition policy ○ Industry regulation ○ Govnt. Spending and tax policies ○ Business policy ● Economic ○ Interest rates ○ Inflation ○ Consumer spending and income ○ Business cycle (GDP) ● Social ○ Demographic change ○ Impact of pressure groups ○ Consumer taste and fashions ○ Changing lifestyles ■ Ex. Implication: consumers are becoming more interested in a healthy lifestyle, this would be a threat/bad for Pepsi because of its sugar amount and unhealthy ingredients, which is unattractive for Pepsi’s future ■ Recommendation: Focus on investing in research in development for healthier options (Alternate sweeteners) ● More products in case others decline ● Autonomous cars for delivery ● More sustainable factories ● Gaining consumer's trust through transparency ● Technological ○ Usually good/helps industry ○ Disruptive technologies ○ Adoption of mobile technology ○ New production processes - more efficient and faster production ○ Big data and dynamic pricing ● Legal ○ Employment law ○ Minimum/living wage ○ Health and safety laws ○ Environment legislation ● Ethical/environmental ○ Sustainability ○ Ethical sourcing (supply chain)- sourcing supply at the same standards that you expect of yourself ■ Implication: Is selling Pepsi to customers ethical? → not really because its bad for you, this might create an unattractive future for Pepsi ■ Recommendation: search and continue working on more sustainable and healthier alternatives. ● ○ Pollution and carbon emissions Demographic ○ What does your target market age, gender, or demographic like and dislike Diversification Strategies (implications on Pepsi acquiring soda stream and how their related diversification and exchange and sharing of skills would exploit brand name, marketing skills, service operation, R&D and new product development and and economies of scale) *On the exam talk about what the company did and why it was a good move using 3 factor test of attractiveness to see if diversification should be accepted or rejected Implications: if they should diversify (if decision hasn't been made yet) or if diversifying was a good idea using test of attractiveness Recommendations: what could soda stream utilize from pepsi to make company better ● Related diversification ○ Expanding a company and entering a market that has commonalities ○ Ex. Pepsi acquiring soda stream ○ Ex. McDonald's entering breakfast market ○ For related diversification they must have STRONG: ○ Brand name: Strong brand name added McCafe ○ Marketing skills: already well known brand so yes ○ Service operation: Good service operation ○ New product capability: added eggs, new buns, new breakfast products ■ Experimenting with coffee, the size of the menu, ○ Excess capacity: do they have space? ● Capacity in the restaurant- take advantage of capacity in the morning by offering breakfast- can they store extra products? ○ Economies of scale: will they be able to save money by increasing production → McDonalds will need more supplies when entering breakfast, so now they can buy in bigger bulk at lower prices ● Unrelated diversification ○ Entering a market/industry that is not related and has nothing to do with current business ○ Ex. company Berkshire Hathaway (manufacturing company) acquired food company (Dairy Queen), retail company (fruit of Loom), etc ○ Pros to this: ■ Manage and allocate cash flows ● Unrelated diversification can balance cash flows ● Might merge with a cash cow to provide a source of cash ● If seasonal maybe you need cash flow for seasons where not as operational ■ Entering business areas with high ROI prospects ● Entering high-growth business area ● ROI = Return / investment ■ Obtaining a bargain price for a business ● Acquire business at a bargain price so involved investment is low and associated ROI is high ■ Potential to restructure firm ● Rid of division and add something new ■ Reducing risk ● Diversifying portfolio- if one project fails in one industry at least u have another in a different industry ■ Tax benefits ● Govt incentives for businesses ■ Vertical integration ● Elon Musk Buying Twitter ● 3-factor test of attractiveness to see if diversification was a good idea? 1. Is the industry that you want to enter attractive? - ability to earn profit 2. Low cost? - did you pay a reasonable amount? 3. Are you better off if you do this?- Share price going up, advantage, better technology, better brand name, reputation? ○ Ex. Pepsi bought a soda stream ■ 1. Fast sales growth and getting into something very attractive ■ 2. Paid 3.2 billion $ which isn't super expensive for a big company Pepsi ■ 3. Better off? YES, more sales, and taking away the threat of substitutes by acquiring the substitute Global strategies Implications: if global, what strategy does the industry use/belong in? If looking to expand globally, what strategy should they use? Recommendations: if haven't expanded globally, maybe recommend a strategy that would be best ● Why do companies want to expand globally? ● What are risks when looking internationally? ○ Might not understand consumer behaviour or shopping patterns in other countries ○ Very expensive marketing bc people might not know about you ○ Cultural behaviours ○ Oversees suppliers ● Pressure from local responsiveness (how difficult will it be to attract customers? do people already know about this industry or not?) vs pressures from price comparisons (is price a very important factor in competition?) ● ○ Transnational strategy: Auto company ■ A lot of pressure to maintain price comparability ■ And have to adapt to different car preferences in different countries ○ Multidomestic: law firm ■ Must adapt to different laws in different countries ■ Don't have to worry to much about price combability ○ International: pharmacy ■ Drugs are the same in every country, so don't need to adapt much - low pressure for local responsiveness and low-cost reduction ■ Only thing that really changes is packaging with different language ○ Global strategy: soft drinks ■ Low pressure for local response because the taste of pops are consistent in every country unless you're a new soft drink company ■ High cost reduction why? Entry Strategies *On exam, does the industry that your company in use any of these strategies? Talk about risk, control and profit and what strategies they should use if not using any yet. Implications: ? Recomendations: ? ● Licensing: allowing other parties to use your intellectual property and sell (patents, copyrights) ○ Ex. The Walt Disney Company licenses its characters, stories, and brand to various toy manufacturers for the production of Disney-themed merchandise ● Exporting: selling products to customers in foreign markets ○ Ex. shipping clothes to people in Australia ● Franchising: creator of chain (franchisor) lets other people (franchisees) use their brand and business model and open up more stores ○ Baskin robins ● Contract manufacturing: outsourcing production of products from other countries ○ Ex. china manufacturing clothes for clothing brand ● Joint ventures and strategic alliances: merging with another company to acquire and pursue business opportunity or enter foreign market ○ Ex. Sony and Ericsson, two major electronics companies, formed a joint venture to create Sony Ericsson ○ the mobile phone industry was highly competitive and required significant resources for research, development, and marketing. By pooling their resources, they aimed to gain a competitive edge in the market. ● Foreign direct investment: directly investing capital or acquiring business in a foreign country ○ High risk but high potential for profit Breakeven analysis What they should do. ● To reduce breakeven and reduce risk focus on if there are more variable or fixed costs that take up the majority of costs and drive those costs down Profit Pools What they could do to make profit. ● ● ● ● Want to focus on generating profit in orange area Red zone is hard to succeed in Where profit is generated and how Key Success Factors *on exam talk about what key success factors are important in this industry and see if your company or your companies business decisions positively relate Implications: list 4 key success factors important to the industry Recommendations: for company? ● Activities or elements a business must focus on and excel at in order to achieve objectives ● Technology-related KSF’s ○ Production process innovation capability ○ Scientific research expertise ● Manufacturing-related ○ Low-cost production efficiency ○ Quality of manufacture (low defects, less need for repairs) ○ High labour productivity ○ Flexibility to manufacture range of designs sizes models ● Distribution-related ○ Strong network of wholesale distributors ‘low distribution costs ○ Fast delivery ● Marketing related ○ Strong network of wholesalers ○ Merchandising skills ○ Attractive packaging ○ Breadth of product line and production selection ○ Customer guarantees and warranties ● Skills-related ○ Superior talent ○ Quality control know-how ○ Design expertise ○ Ability to come up with clever and catchy ads ● Organizational culture ○ Ability to respond quickly to shifting market conditions ○ More experience and managerial know-how ● Other types ○ Favourable image reputation with buyers ○ Overall low cost ○ Convenient locations ○ Pleasant and courteous employees ○ Access to financial capital ● Ex. soft drink industry ○ Location and distribution: need good distribution for people to stay loyal, if tehres not good distribution customers will unjust buy something else bc theres so many substitutes ○ Cost control: need good low prices or else no one will buy ○ Volume: one can / bottle isnt very expensive so need to sell at large volume to produce profit Competiton (draw implications about PepsiCo's biggest competitors and compare to Pepsis decision to acquire soda stream (be specific)) Strategic Group Mapping ● Technique to reveal different competitive positions of industry rivals to find competition of your company ● US. restaurant chain ● ● ● ● Interpretation (implication): ○ The closer the strategic groups are on the map, the stronger the cross-group competitive rivalry tends to be Ex. Coke and Pepsi in the same strategic group Identify gaps that might indicate business opportunities (recommendation) Competitive intelligence → Strengths and weaknesses of competitors relative to the industry’s key success factors ● Look at competitors' models/decisions compared to yours and see who aligns better with industry’s KSF Company Analysis Porters Generic Strategies (which one of porters generic strategies does Pepsi use and soda stream use and how could Pepsi acquiring soda stream benefit their strategies) Implications: which strategy company currently uses. Is it working for them, why or why not? - _____ uses a _____ strategy. Because they offer ______ Recommendations: what can they do can better based on their current strategy? ● Strategies that are used by companies based on where they fall in relation to cost advantage and differentiation strengths *on exam identify current business strategy (which one they use) and if it's working ● ● Overall Cost leadership strategy ○ Use if a company is low-cost producer in the industry for a given level of quality ○ Offers low prices ○ Target broad market ○ Can get cost advantages by ■ Improving process efficiencies - making processes more efficient ■ Gaining unique access to large source of lower cost materials ■ Outsourcing decisions and vertical integration ■ Vertical integration: company expands its operations by acquiring or merging with other businesses along the supply chain or distribution channel that are either upstream (towards suppliers) or downstream (towards customers) ● Ex. car manufacturer acquires a steel manufacturing company that supplies steel for vehicles ● OR coffee shop opens more locations in malls, airports grocery stores ○ Ex. Walmart uses this ■ Have a highly efficient supply chain ■ Uses economies of scale to negotiate lower prices ■ Core principle is to provide customers with lowest possible prices ● ● ● ■ Has large market share and broad scope (wide and diverse customer base) Differentiation strategy ○ Development of a product or service that offers unique attributes that are valued by customers and that customers perceive as better than others ○ Uniqueness allows the firm to charge a premium price for it and customers can't find substitutes easily ○ Risk of imitation by customers ○ Ex. apple ■ Unique product designs ■ Innovative technology ■ Strong brand image ■ Broad scope: Focused on serving specific market segments: aim to appeal to customers' needs and preferences ○ EX. proctor and gamble ■ Wide product range: Tide (laundry detergent), Crest (oral care), Gillette (razors and personal care), Pampers (baby care) ■ Offer different and unique products Focus strategy ○ High degree of customer loyalty bc narrow scope ○ Have Lower volumes so less bargaining power with suppliers **** ○ BUT firms with a differentiation focus strategy can pass higher costs bc of less substitutes ○ To be successful a firm must only select one otherwise will be stuck in the middle ○ Example. Starbucks ○ Focus on setting coffee business apart from competitors ○ Use Broad Differentiation Focus ○ Making business and products different from other coffeehouse firms ○ Emphasize specialty coffee ○ Frequent introduction of new products and unique beverages ○ They must keep innovating differentiation and uniqueness of products ○ Companies have tried to match starbucks uniqueness ● Mcdonalds example ○ Use Cost Focus ○ Competitive advantage through cost minimization ○ Max efficiency min costs ○ Large size of business allows for economies of scale Diversification / Portfolio Management - BCG Matrix Implications: What products company offer, is their BCG matrix equally distributed, is it looking good for future of company or not? Recommendations: How would you adjust the matrix, what strategies would you recommend? - How can I relate this to diversifying acquiring a new company? - “Acquiring this company would provide company with a cash cow… this would be good for” → too many cash cows/ too many dogs, what should you recommend? → Look at things you can do with these products (strategies) and talk about why they should be doing what you recommend ● Planning model based on market growth (the rate at which the company is expanding) and market share (the portion of the market that they control) ● Increase in market share = increase in cash ● Growing market = requires investments of cash to continue growth = consumption of cash ● ● Strategies ○ To build market share- make additional investments ■ Question Marks ● Can build market share and invest a little bit into them to see if they have the potential to become a star ○ Hold strategy - maintain status quo and do nothing ■ STARS ● Dominant player so maintain status quo ● Eventually, they become cash cows → move to harvest ○ Harvest strategy - reduce financial support - reduce advertising promotion ■ CASH COWS ● Generate as much cash flow as possible ○ Divest - eliminate ■ DOGS ● Sucking up too much cash and don't want to invest in them ● Low growth very competitive ■ Question Marks/Problem children ● Can eliminate but don't know if they will be successful ● Can put money into them to see if they can be a star BCG matrix and product life cycle ● Stars and question marks only occur in growth stages ● Cash cows and dogs exist in maturity and decline stages TOO MANY CASH COWS AND DOGS ● ○ ○ Company has nothing placed in growth markets, so lack investments in futureconcerning You want company with all four quadrants and a bit heavier weighting toward cash cows and stars ○ Best for profitability today and now - cash cow ○ Best for profitability in future - star TOO MANY STARS AND QUESTION MARKS ● ○ ○ ○ Concern here is alot of question marks - heavy users of cash This would be example of startup Recommend: divesting some question marks and trying to manager cash flow unil one becomes a cash cow ● Ex. coca cola ○ Regular coke: cash cow ○ Zero sugar coke: star ○ Honest Tea (acquired by Coca-Cola): smaller market share in the organic and natural beverage segment (a segment with growth potential): question mark ○ Odwalla (acquired by Coca-Cola): declining sales and discontinued Organizational design *On exam- How is organization set up? Is it set up in the best way to meet objectives? - Might not have enough information to do ● Way you set up a business to meet objectives ● Efficiency vs. effectiveness ○ Efficiency: the speed/logistically easy to do something ○ Effectiveness: how well something does the job ● 1. Functional structure (Marketing/HR/finance) ● 2. Division (Geographic/product types) eg. UWO (different faculty ● How you structure: employees, information and technologies ○ Purpose of business: what do you want to achieve ○ Strategy to reach goal: how are you going to succeed ○ Division of labour: how can you divvy up employee responsibilities, where they can thrive ○ Authority responsibility and control:once employees are in place, how will you delegate decision-making responsibilities ○ Communication: how can facilitate good communication, making sure everyone on same page ○ Coordination: coordinate employees, information and technologies ● Create an organizational chart to help provide you, your employees and outsiders with representation of organizational roles and relationships ● Types of organizational designs: ○ Traditional: ■ ● Simple structure: low departmentalization, little formation, wide control ● Usually when companies begin ■ Functional: groups of similar or related occupational specialties together ● HR, marketing, accounting, ● Revlon, Ford Motor ■ Divisional: separate, semi-autonomous units or divisions ● Walmart, Ford Motor (different product lines- fleet, Lincoln, electric) ○ Contemporary: ■ Team structure: made up of teams all working toward common goal ● No hierarchy or chain of command ● Whole foods ■ Matrix structure: assign specialists from different functional departments to work on one or more projects ● Assign to project managers ● From accounting, sales, marketing, engineering and human resources ● Gather specialists from each department for the project ■ Project structure: employees continuously work on projects ● Like matrix but when project ends they don't go back to departments they start another project ● William demat holding: all work was project-based ■ Autonomous Internal units: independent decentralized units with own clients competitors and profit goals ■ Boundaryless organization: usually hire specialists ■ Learning organization: developed capacity to continuously learn adapt and change. 6 components of a great organization structure ● Vision: guide company values and orient every decision employees make ● Values: values are the core of its culture ○ Values offer a set of guidelines, behaviours and mindsets needed to achieve vision ● Practices: values must be portrayed in a company’s practices ● People: people must share values and possess willingness and ability to embrace values ● Narrative: the ability to take the history of an organization and craft it into a narrative to create a strong organizational culture ○ Ex. formal: coke dedicated resources to celebrating its heritage ○ Informal: steve jobs early fascination with calligraphy ● Place: environment that employees work in Corporate Social Responsibility *on exam talk about if they have any sort of CSR, do they execute CSR well? - Only talk about this if provides facts on it in article ● Social and environmental sustainability ● Auditing and ethics ● The anti-CEO playbook | Hamdi Ulukaya ● ● ● ● ● All about community responsibility and accountability rather than maximizing value for shareholders Need to go Above and beyond profits Gratitude Take care of employees first CEO reports to consumers SWOT SWOT Analysis (“SWOT analysis for Pepsi acquiring soda stream”) ● Strengths: of soda stream and how it’ll help pepsi ○ competitive advantage ○ Patent ○ Strong brand name ○ Good reputation ○ Cost advantages ● Weaknesses: of pepsi and how acquiring soda stream would help ○ Lack of patent protection ○ Weak brand name ○ Poor reputation ○ High cost structure ● Opportunities (external): that soda stream would provide for pepsi ○ New opportunities for profit and growth ○ Unfulfilled customer need ○ New technology ○ Loosening of regulations ○ Removal of trade barriers ● Threats ○ Shifts in customer tastes away from products ○ Emergence of substitutes ○ New regulations ○ Increased trade barriers ● S-O strategies: pursue opportunities that are good fit to company strengths ● W-O strategies: overcome weaknesses to pursue opportunities ● S-T strategies: identify ways that firms can use strengths to reduce its vulnerability to external threats ● W-T strategies: establish defensive plan to prevent firms weaknesses from making it highly susceptible to external threats Sustainable Competitive Advantage (“sustainable competitive advantage model (matter to customers, durable, hard to copy, exploitable): Pepsi acquiring soda stream- relate all to one of their biggest strengths”) *On exam, is company sustainable? What can they do to get a sustainable competitive advantage over competitors? Why or why not? → Recommendations based on where they stand - if possible ● Occurs when an organization acquires or develops attributes or a combination of attributes that allows it to outperform competitors ○ Access to natural resources ○ Access to highly trained and skilled personnel ○ Advantage that is not easily copied this can be maintained over long period of time ● Criteria for sustainable competitive advantage: Are resources: ○ Are they valuable ○ Are they rare ○ Are they imperfectly imitable ○ Are they non-sustainable ● Developing sustainable competitive advantage ○ Customer loyalty: branding positioning and loyalty programs ○ Location ○ Distribution and information systems: get products at cheap price and sell for reasonable price (ex. Walmart) ○ Unique merchandise: private label brands are only available from retailer who developed and marketed them ○ Vendor relations: ○ Customer service: good reputation ○ Multiple source advantage: ex. Mcdonald's is known for hot, fast and clean food, with cheap meals, nice facilities, good customer service and a strong reputation ● Example recommendations to build sustainable growth ○ Diversification: Starbucks can continue to diversify its product offerings, such as expanding its food menu, introducing new beverages, and entering emerging markets. ○ Digital Transformation: Invest in technology to enhance the customer experience through mobile ordering, loyalty programs, and personalized marketing. ○ Sustainability Initiatives: Strengthen sustainability efforts by sourcing more ethically, reducing environmental impact, and engaging in community initiatives. ○ Market Expansion: Continue global expansion, particularly in countries with a growing coffee culture. ○ Customer Engagement: Foster customer loyalty through initiatives like a rewards program and community engagement. ○ Cost Management Value chain *on exam examine if theres anything to remove or improve. how a company can use this model to maximize efficiency and opportunities ● Porter’s value chain: used to analyze a company's internal operations and identify opportunities for improving efficiency, reducing costs, and creating value ● Goal is to offer customer a level of value that exceeds costs of activities resulting in profit margin ● Activities ● ● Primary activities: activities directly involved in the creation and delivery of a product or service ○ Inbound logistics: receive and warehousing of raw materials and distribution to manufacturing ■ Efficient inbound logistics can reduce costs and improve production processes. ○ Operations: process of transforming inputs into finished goods ■ Improving operational efficiency can lead to cost savings and better product quality. ○ Outbound logistics: warehousing and distribution of finished goods ■ Effective logistics management can lead to faster delivery and reduced transportation costs. ○ Marketing and sales: identification of customer needs and generation of sales ■ Good marketing and sales can increase demand and market share ○ Service: support of customers after products and services are sold ■ Good customer support can ensure customer loyalty and retention Activities are supported by Support Activities: provide the necessary infrastructure and resources for primary activities to function effectively. ○ Infrastructure of firm: organizational structure, control systems, company culture ■ A well-structured firm can support the primary activities more effectively. ○ Human resource management: employee recruiting, hiring, training, development and compensation ■ A well-trained HR team and training program can employ skilled and motivated workers and increase customer satisfaction and production ○ Technology development: tech to support value-creating activities ■ Advanced technology can help make processes more efficient ○ Procurement: purchasing inputs such as materials, supplies and equipment ■ Effective procurement can reduce input costs and ensure a reliable supply chain.
