A2.4.3.2 Activity Types


Porter maintains that there are three types of activity:


1. Direct activities

Those which directly involve the creation of value for the buyer. They vary widely and, depending on the firm, may include, for example, parts assembly, sales force operations, product design, advertising and recruitment.


2. Indirect activities

Those which enable direct activities to be performed on a continuing basis, such as maintenance, scheduling, sales force administration, record keeping, etc. Not generally well understood, these may play a significant part in either cost or differentiation. Accounting and other practices tend to “lump” indirect and direct activities together although “the two often have very different economics”. Porter points out that there are often trade-offs – more spending on maintenance reduces machine costs, for example – and warns that another practice, that of grouping indirect activities into overheads, obscures their cost implications and/or contribution to differentiation.


3. Quality Assurance

Those activities which ensure quality within other activities, e.g. monitoring, inspection, checking. This definition, Porter pointed out in 1985, was not the same as ‘quality management’ as it was then perceived. This was because ‘quality’ is the result of many activities.