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Value Chain Essay

573 words - 3 pages

According to the M. Porter Value chain is the chain of activities that a firm operating in specific industry performs in order to deliver a valuable product or service for the market. He introduced concept of value chain in his book "The Competitive Advantage" in 1985. Now this concept is one of the best known and widely applied.
Value chain analysis helps to identify a firm's core competencies and distinguish those activities that drive competitive advantage. According to Porter:
“Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its ...view middle of the document...

Operations - transformation activities that change inputs into outputs that are sold to the customer. These activities refer to machine operating, assembly, packaging, testing and maintenance. Here, operational systems create value.
Outbound Logistics - these activities deliver finished goods to customer.
Marketing and Sales - these activities include advertising, promotion, selling, pricing, channel management. The activities are performed to make sure that the products are transferred to the targeted customer groups. The benefits company offers and how well it communicates them are sources of the value here.
Service - companies offer the service after the product have been sold. This may come in form of after sales training, guarantees and warranties.
Support Activities: These activities support the primary functions above. They consist of the following:
Procurement - this is what the organization does to get the resources it needs to operate: purchasing raw materials, lease properties, supplier contract negotiations.

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