Supporting Activities
In the context of business and management, “supporting activities” often refer to the components of Michael Porter’s Value Chain analysis, which is a framework for understanding the activities within an organization that create value for its customers. The Value Chain splits the activities of a company into “primary activities” and “supporting activities.”
Primary activities relate directly to the creation, sale, maintenance, and support of a product or service. They include:
- Inbound Logistics
- Operations (production)
- Outbound Logistics
- Marketing & Sales
- Service
Supporting activities, on the other hand, provide the necessary infrastructure for the primary activities to occur. These activities support the entire chain and could potentially add differentiation and value at each primary activity. Supporting activities include:
- Firm Infrastructure: This refers to the organizational structure, control mechanisms, company culture, etc. It includes elements like management, planning, finance, and quality control.
- Human Resource Management: All activities related to recruiting, hiring, training, development, compensation, and retention of employees fall under this category. Effective HR management can lead to higher efficiency and better productivity.
- Technology Development: This is related to the technology used in creating the product, but also supporting materials, technologies used in research and development, and equipment. Technology can be a source of competitive advantage if a company can innovate or utilize technology more effectively than its competitors.
- Procurement: This involves the function of sourcing and purchasing raw materials, resources, equipment, and supplies for the business operations. Efficient procurement can lead to cost savings and ensure the timely availability of essential resources.
Each of these supporting activities can be a source of competitive advantage if managed well. For instance, a company with a strong organizational culture (Firm Infrastructure) might be more agile and responsive to market changes. A company that excels in human resource management might attract and retain top talent, leading to superior products or services.
Example of Supporting Activities
Let’s use the fictional company “BrightTech Electronics” to illustrate how supporting activities function in the context of its operations and strategy.
BrightTech Electronics: A company that designs and sells smart home devices, such as smart thermostats, light bulbs, and security cameras.
Supporting Activities at BrightTech Electronics:
- Firm Infrastructure:
- Organizational Structure: BrightTech has a flat structure with open communication channels, encouraging employees at all levels to share ideas and feedback.
- Control Mechanisms : The company uses advanced analytics to monitor sales and customer feedback, allowing it to quickly adapt to market demands.
- Company Culture: BrightTech prioritizes innovation and sustainability. Employees are regularly encouraged to brainstorm eco-friendly product ideas, leading to the development of a solar-powered security camera.
- Human Resource Management:
- Recruitment: BrightTech actively recruits from top tech universities, ensuring a continuous inflow of young talent.
- Training: New hires undergo an intensive one-month training program to familiarize them with BrightTech’s product line and company culture.
- Employee Benefits: BrightTech offers flexible work hours, health benefits, and continuous learning opportunities, resulting in a low employee turnover rate.
- Technology Development:
- Research & Development: BrightTech allocates 15% of its annual profits to R&D, leading to the development of innovative features like AI-driven energy-saving algorithms in their smart thermostats.
- Collaborations: The company collaborates with leading tech firms to integrate voice assistants and other technologies into its products.
- Procurement:
- Sourcing Materials: BrightTech sources eco-friendly materials for its products, aligning with its sustainability goals.
- Supplier Relationships: The company has long-term contracts with reliable suppliers, ensuring consistent quality and timely delivery. They’ve also established a Supplier Code of Conduct to ensure ethical practices in their supply chain.
Impact on Primary Activities:
- Inbound Logistics: Due to strong supplier relationships, BrightTech receives materials on time, ensuring smooth production processes.
- Operations: With continuous R&D and well-trained employees, the production of smart devices is efficient and up-to-date with market demands.
- Outbound Logistics: Leveraging the firm’s infrastructure, BrightTech uses data analytics to forecast sales and manage inventory, reducing storage costs.
- Marketing & Sales: The company’s reputation for innovation and sustainability, rooted in its supporting activities, gives it a competitive edge in marketing.
- Service: Well-trained employees provide excellent post-sale services, including installation and troubleshooting, enhancing customer loyalty.
In this fictional example, BrightTech Electronics’ supporting activities play a crucial role in its success, not just behind the scenes but in every facet of the business, directly influencing primary activities and overall value proposition.
