Answer to Question 1
Porter's model of business activities includes linkages, which are interactions across
value activities. For example, manufacturing systems use linkages to reduce inventory costs.
Such a system uses sales forecasts to plan production; it uses the production plan to determine
raw material needs and then uses the material needs to schedule purchases. The end result is justin-time inventory, which reduces inventory sizes and costs. Value chain analysis has a direct
application to manufacturing businesses and also exists in service-oriented companies.
Answer to Question 2
B