technology development and procurement. These secondary activities
take place in order to support the primary activities. For example, the
firm’s infrastructure (e.g. management, finance and buildings) serves to
support the five primary functions.160 Strategic Marketing: Planning and ControlIllustrative Example 8.2
Citigroup Acquires Egg
Citigroup has agreed to buy EGG, the online banking group owned by Prudential. EGG is a
purely Internet-based provider of a range of financial services including: credit cards, loans,
mortgages and savings accounts to approximately 3 million customers. The company has
strong brand recognition and a reputation for innovation.
The combined grouping will quadruple Citigroup’s UK customer base and establish a
broad-based financial services provider.
George Awad, CEO, Citigroup Global Consumer Group, Europe, Middle East and Africa,
said: ‘We like Egg’s brand; we like Egg’s platform; we like Egg’s customer engagement model;
and we like Egg’s customer set. This is a terrific acquisition for Citigroup because it provides
us meaningful scale in consumer financial services in the UK, a key strategic market, and
enables us to enhance the value proposition for customers. We will deliver growth by combin-
ing Egg’s leading edge online products and distribution with Citigroup’s global banking
expertise and scale. We look forward to working with the team at Egg.’
Source: http://www.citigroup.com/citigroup/press, January 29 2007, Accessed 31/1/07.
While each activity generates ‘value’, the linkages between the activities are
critical. Consider the interface between in-bound logistics and operations.
A just-in-time logistics system, supported by computerised stock ordering
(technology development – secondary activity) could reduce stock costs
and enhance the quality of products manufactured in the operations phase
of the chain. Thus enhancing the overall value generated by the process.
The value generated is shown as the ‘margin of value’ in Figure 8.7.
The value chain provides an additional framework to analyse competi-
tive advantage. It helps identify the key skills, processes and linkages
required to generate success. Additionally, the concept can link organisa-
tions together. A series of value chains can be analysed as one overall
process. For example, the value chains of a component manufacturer and
equipment manufacturer could be merged into one system, with common
support activities. This could have the effect of reducing overall costs and
improving co-ordination between the companies.■ Industry position
Clearly, strategy formulation must consider the position held within a
given industry and the organisations resource base relative to competitors.