Porter Value Chain Analysis

The value chain analysis is a business management concept developed by Michael Porter in his book Competitive Advantage. It is a powerful tool for disaggregating a company into its strategically relevant activities in order to focus on the sources of competitive advantage, that is, the specific activities that result in higher prices or lower costs . The value chain consists of two types of activities: primary activities and support activities . Primary activities are those that go directly into the creation of a product or the execution of a service, including inbound logistics, operations, outbound logistics, marketing and sales, and after-sales services . Support activities are those that support the primary activities and include procurement, technology development, human resource management, and firm infrastructure . By analyzing these activities, companies can identify areas where they can create value and reduce costs ?. The value chain analysis can help organizations improve production procedures and make more informed business decisions ?.

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