One reason that the value chain analysis is a valuable tool for cost analysis is that cost drivers tend to be very different between the different activities of the firm.

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The value chain analysis breaks down a firm's activities into primary and support activities, each of which has its own cost drivers. The analysis identifies where costs are being incurred in each activity and helps management to understand the nature of the cost drivers in each activity. This enables management to focus cost reduction efforts on areas where the biggest cost savings can be made. Therefore, it is true that cost drivers tend to be very different between the different activities of the firm.

One Reason That the Value Chain Analysis Is a Valuable