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Apr 12
The value chain is a concept developed by Michael Porter that describes the sequence of activities a company performs in order to deliver a valuable product or service to its customers. The primary activities in the value chain are those that are directly involved in the production and delivery of the product or service, while support activities are those that enable the primary activities to be carried out effectively.
Primary activities in the value chain include inbound logistics, operations, outbound logistics, marketing and sales, and service. Inbound logistics involves the receiving, storing, and distributing of raw materials and other inputs to the production process. Operations are the activities involved in transforming these inputs into the final product or service. Outbound logistics involves the distribution of the finished product to customers. Marketing and sales activities are focused on promoting the product and attracting customers, while service activities involve providing support and assistance to customers after the sale.
Support activities in the value chain include procurement, technology development, human resource management, and firm infrastructure. Procurement involves sourcing and purchasing the inputs needed for production. Technology development involves research and development activities that improve the product or production process. Human resource management activities focus on recruiting, training, and retaining employees. Firm infrastructure includes activities such as finance, accounting, and legal services that support the overall functioning of the organization.
Overall, the value chain concept helps companies to identify the key activities that create value for customers and to optimize their operations to deliver that value efficiently. By understanding the primary and support activities in the value chain, companies can better allocate resources and improve their competitive advantage in the marketplace.
Reference:
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
Primary activities in the value chain include inbound logistics, operations, outbound logistics, marketing and sales, and service. Inbound logistics involves the receiving, storing, and distributing of raw materials and other inputs to the production process. Operations are the activities involved in transforming these inputs into the final product or service. Outbound logistics involves the distribution of the finished product to customers. Marketing and sales activities are focused on promoting the product and attracting customers, while service activities involve providing support and assistance to customers after the sale.
Support activities in the value chain include procurement, technology development, human resource management, and firm infrastructure. Procurement involves sourcing and purchasing the inputs needed for production. Technology development involves research and development activities that improve the product or production process. Human resource management activities focus on recruiting, training, and retaining employees. Firm infrastructure includes activities such as finance, accounting, and legal services that support the overall functioning of the organization.
Overall, the value chain concept helps companies to identify the key activities that create value for customers and to optimize their operations to deliver that value efficiently. By understanding the primary and support activities in the value chain, companies can better allocate resources and improve their competitive advantage in the marketplace.
Reference:
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
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