A value chain is a series of consecutive steps that go into the creation of a finished product, from its initial design to its arrival at a customer’s door. The chain identifies each step in the process at which value is added, including the sourcing, manufacturing, and marketing stages of its production .
The purpose of a value-chain analysis is to increase production efficiency so that a company can deliver maximum value for the least possible cost . The theory analyzes a firm’s five primary activities and four support activities . The primary activities consist of five components: inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities include procurement, technology development, human resource management, and firm infrastructure .
Value chains help increase a business’s efficiency so the business can deliver the most value for the least possible cost. The end goal of a value chain is to create a competitive advantage for a company by increasing productivity while keeping costs reasonable .