Questions: According to Figure 4.5, a company can translate its performance of value chain activities into competitive advantage by striving to beat rivals by performing certain differentiation-enhancing value chain activities more proficiently (thus creating a differentiation-based competitive advantage keyed to delivering what customers perceive as a superior product offering) or beat rivals by performing value chain activities more cheaply (thus achieving a cost-based competitive advantage). build a portfolio of resources and capabilities that contains substantially more competitive assets than competitive liabilities and then implementing ways to use its competitive assets to perform value chain activities more efficiently than rivals. develop a value chain with few support activities (so as to keep costs low) and focus on performing only those primary activities that deliver the most value to customers. develop more core competencies and distinctive competencies than rivals and thereby gain a competitive advantage based on superior differentiation-enhancing competencies and capabilities. build a technologically innovative value chain that allows it to produce the highest quality product in the industry, thereby securing a differentiation-based competitive advantage.

The question is asking how a company can translate its performance of value chain activities into a competitive advantage. Let's evaluate each option:

1. Performing differentiation-enhancing value chain activities more proficiently: This option suggests creating a differentiation-based competitive advantage by delivering what customers perceive as a superior product offering. This is a valid strategy as it focuses on enhancing the unique aspects of a product or service that set it apart from competitors, thereby attracting customers who value those differences.

2. Building a portfolio of resources and capabilities: This involves having more competitive assets than liabilities and using these assets to perform value chain activities more efficiently than rivals. This approach is about leveraging internal strengths to outperform competitors, which can lead to both cost and differentiation advantages.

3. Developing a value chain with few support activities: This option focuses on keeping costs low by minimizing support activities and concentrating on primary activities that deliver the most value. While cost control is important, completely minimizing support activities might overlook essential functions that contribute to overall value and differentiation.

4. Developing more core competencies and distinctive competencies: This strategy aims to gain a competitive advantage through superior differentiation-enhancing competencies and capabilities. By focusing on building unique strengths that competitors cannot easily replicate, a company can achieve a sustainable competitive advantage.

5. Building a technologically innovative value chain: This involves creating a value chain that allows the production of the highest quality product in the industry, securing a differentiation-based competitive advantage. Innovation can be a powerful differentiator, especially if it leads to superior product quality that is valued by customers.

In summary, the answer is a combination of strategies that focus on differentiation and cost advantages. Options 1, 2, 4, and 5 all provide valid pathways to achieving a competitive advantage through differentiation, efficiency, and innovation. Option 3, while focusing on cost, may not fully capture the potential for differentiation and value creation.