The Value Of A Business Chain

In order for a firm to create competitive advantage, it needs to create a set of activites that can deliver value to the specific product and services it offers to its customers. To start talking about my life as a “value chain”, I may need to compare it to a specific product”. This is going to take precedence both in my personal life and professional life.

The value chain, made by Michael Porter, is really important to see how a company structure is created. The value chain is constituted by two parts: support activities (firm infrastructure, human resource management, technology development, procurement) and primary activities (inbound logistic, operations, outbound logistic, marketing and sales, service). (Johnson et al. 2011, p.97-99)

One of Porter’s main contributions was Porter’s value chain. The value chain is all the activities an organization undertakes to create value for a customer. According to Porter, there are two ways to gain an edge over competitors. A firm must provide comparable but value but perform the activities on the chain at a lower cost, or; Perform services in a unique way

The value chain is one of the critical elements of a company’s strategy in today’s competitive world, because company’s profit depends on how the successful and efficient it runs its operations and how the end product appeals to the customers at a price that covers all the expenses of the company.

A value chain is an essential model for businesses that are trying to gain a competitive edge over their respective counterparts. “The purpose of the value chain is to sequentially link interdependent operational activities that create a value that exceeds the cost of producing or providing a product or service; thus creating a profit margin” (Porter, 1998). In order to measure and further develop the implemented value procedure, a value analysis should be conducted on the chain or system in place; solidifying it’s viability and potential profit growth. This methodology is not only recommended for profit-based businesses, but the same principle can be applied to a non-profit company.

According to Michael Porter’s concept about value chain, “activities within the business companies add value to the product and service that the business organization or companies produces”. The idea of the value chain is based on the process view of organization, the idea of seeing a manufacturing firm as a system, made up of subsystems each with inputs transformation process and output. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and

The value chain is one of the critical elements of a company’s strategy in today’s competitive world, because company’s profit depends on how the successful and efficient it runs its operations and how the end product appeals to the customers at a price that covers all the expenses of the company.

The industry value chain is the process from the suppliers of the raw material to the end customers who demand the service of transportation.

“The value chain identifies where the value is added in an organization and links the process with the main functional

A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter (Porter, 2013)

Starting a business implies to perform value-creating activities. All these activities are connected to the different stakeholders, such as suppliers, consumers or even marketing channels. Michael Porter defined the value chain as a combination of all support and primary activities that take part into the creation of the product or service. (See appendix to have a deeper description of all the activities). Creating value comes with the discovery of an opportunity and the exploitation of it. Michael Porter “created value chain analysis as a means to organize and understand the customer-value-creating activities and processes within a company” (Price, 2011). The company focuses on its internal business activities that affect its costs and that

Michael Porter in his book “Competitive Advantage: Creating and Sustaining superior Performance” published in 1985 introduce the Value Chain Analysis. His theory explained how an organisation can use or maximise its competitive position or strength by linking the activities it performs. This theory assumes that the organisation is more than a random compilation of machinery, people and money. It also proposes that if these things are arranged into systems and systematic activates, the organisation will be able to produce a product or provide a service that customers are willing to pay a price.

The research draws much attention to value as an important relationship with the customer and supplier, generated together through its value-chain, how it is the cumulative work of the organisation that equals the value of the product and or service to the customer. The product/service is just one

The value chain analysis (shown in appendix) was also generated by Michael Porter. This model is referred to “identifying ways to increase the efficiency of the chain” (Investopedia, n.d.). Furthermore, the overall objective is to produce maximum value with minimum total cost and establish a competitive advantage.

Concepts & Connections 5.1, How Wal-Mart Managed Its Value Chain to Achieve a Low-Cost Advantage over Rival Supermarket Chains