Value Chain By Michael Porter

2187 Words9 Pages
Value Chain Analysis Value Chain is a strategic tool to measure the importance of the customer’s perceived value in value chain analysis. By enabling companies to determine the strategic advantages and disadvantages of their activities and value-creating processes in the marketplace, value chain analysis assumes critical importance in assessing competitive advantage.
The dissertation explores the different elements of the value chain of computer hardware and behemoth Dell and seeks to understand how the different elements interact to create value for the organization.
Literature Review
The idea of a value chain was first suggested by Michael Porter (1985) to depict how customer value accumulates along a chain of activities that lead to an end product or service. Porter describes the value chain as the internal processes or activities a company performs “to design, produce, market, deliver and support its product.” He further states that “a firm’s value chain and the way it performs individual activities are a reflection of its history, its strategy, its approach to implementing its strategy, and the underlying economics of the activities themselves.” Porter describes two major categories of business activities: primary activities and support activities. Primary activities are directly involved in transforming inputs into outputs and in delivery and after-sales support. These are generally also the line activities of the organization. They include:
i. inbound
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