In the value chain model, primary activities are primarily concerned with what type of costs?

In the value chain model, primary activities are primarily concerned with direct costs. This is because primary activities directly influence the creation and delivery of a product or service and include processes such as inbound logistics, operations, outbound logistics, marketing, and sales, and services. The costs associated with these activities—like materials, labor, and overhead that can be directly tied to the production of goods or services—are classified as direct costs.

Direct costs are essential for evaluating the operational efficiency and profitability of the primary activities within the value chain. When businesses analyze their primary activities, they focus on understanding how these direct costs contribute to value creation and competitive advantage in the market. Consequently, recognizing and managing these costs are vital for optimizing operational performance and improving overall business strategy.