Determine the Primary Activities and Secondary Activities of Your Organisation. Make a Conscious Decision on Whether Your Organization Should Compete by the Least Cost Strategy or the Product Differentiation Strategy. Determine the Cost Drivers of...

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|Determine the primary activities and secondary activities of your organisation. Make a conscious| |decision on whether your organization should compete by the least cost strategy or the product | |differentiation strategy. Determine the cost drivers of the organisation. Provide strategic | |suggestions on how your organization can use this information to compete. | | | | | |10/11/2008 | | | |NII ARMAH HAMMOND |

INTRODUCTION
A value chain defines the sequence of activities that add value to inputs directly or indirectly to create the product of an organisation. These activities are categorised into primary activities and secondary activities. Primary activities are the activities that directly create the product, its sale and transfer to the buyer as well as after-sales service. Secondary activities refer to the other activities that support the primary activities. The organisation under review is Merchant Bank Ghana Limited (MBG). A limited liability company and a leading Bank in Accra, Ghana. It was incorporated in August 1971 and commenced business in March 1972 as the first merchant bank in Ghana. MBG provides a comprehensive range of banking services to its customers and clients, using its worldwide network of correspondent banks and their agencies. The bank has two wholly owned specialised subsidiaries namely; Merban Investment Holding Limited (MIHL) – Dealing in Funds/Portfolio Management, Money Market Operations, Investment Advisory Services, Trustee Services and Custodial as well as Nominee Services; Merban Stockbrokers Limited (MSL) – Dealing in Brokerage Services, Underwriting of new issues, and Investor Search & Joint Ventures Arrangements. The MBG group also has the following additional specialist services tailored to meet its customer’s needs: Registrar Services – Maintaining records of Shareholders and Creditors, facilitating dividend payments to Shareholders; and Corporate Finance & Advisory Services (CFAS) – Handling corporate restructuring, Joint Venture Arrangements, Company Valuation, Project Finance, Funds Sourcing, Issuing House Services and General Financial Advisory Services Merban Finance & Leasing Company Limited (MFL) – Dealing with Hire Purchase transactions and Leasing.

In 1985, Professor Michael Porter of the Harvard Business School introduced the concept of the value chain. The Value Chain Analysis is used to identify potential sources of economic advantage. The analysis disaggregates a firm into its major activities in order to understand the behaviour of costs and the existing and potential sources of differentiation. It determines how the firm's own value chain interacts with the value chains of suppliers, customers and competitors. Companies gain competitive advantage by performing some or all of these activities at lower cost or with greater differentiation than competitors’.

PRIMARY ACTIVITIES AND SECONDARY ACTIVITIES
The primary activities and secondary activities of MBG are determined by adapting the generic value chain model by Porter (1985). Porter’s model is shown as Fig.1 below.

Michael Porter’s generic value chain model [pic]

Fig.1

Primary activities of Merchant Bank Ghana Limited
The primary activities are directly related to the production and distribution of a firm’s products or services. These include; Domestic and international Banking Operations for Corporate Customers, Small & Medium Scale Enterprises (SME’s) and High Net-worth individuals;...
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