Answer to Question #247027 in Management for Akhona Klanisi

Question

Firm-Level Value Chain Analysis of Capitec Bank’s Cost Advantage Strategy

Firm-level value chain analysis is a strategic management tool that is used to determine how

primary and secondary activities within a firm add value in ways that may be sources of cost

or differentiation advantage for the firm.

Capitec Bank pursues a cost advantage strategy based on customer perceptions of relative

banking costs. Explain how firm-level primary and secondary value chain activities support

Capitec Bank’s cost advantage strategy. Are there links between the firm-level value chain

activities that make Capitec Bank’s cost advantage especially difficult for competitors to

imitate?

It is not necessary to discuss all of the primary and secondary value chain activities in your

essay answer. Focus on as many of the value chain activities that you believe best serve as

sources of cost advantage for Capitec Bank and the links that may exist between these

activities.

Answer 1

Value chain activities within Capitec Bank are essential to its cost advantage strategy. Primary and secondary value chain activities form a significant link towards achieving cost advantage; for example, primary activities' internal creation and distribution of banking services in a value-added approach would increase potentials for cost advantage success. The value chain can also act as a competitive advantage whereby the company creates value to attract the market. Value chain activities identify weaknesses of the company's banking services, which, once minimized, can help increase margins. There are various firm-level value chain activities, such as creating diversified and unique product services to identify the company the market.