Value Chain Analysis Explained

Value chain analysis (VCA) is a strategic process that examines all activities involved in transforming inputs into outputs for a product or service. The goal of VCA is to identify opportunities for improvement in production procedures and make more informed business decisions.

The value chain can be divided into two categories: primary activities and support activities. Primary activities are those that directly contribute to the creation of a product or service, such as inbound logistics, operations, outbound logistics, marketing and sales, and after-sales services. Support activities are those that indirectly contribute to the creation of a product or service, such as procurement, technology development, human resource management, and infrastructure.

Conducting a VCA involves understanding all primary and secondary activities involved in creating a product or service. It’s important to perform this process for each product or service offered by the company. Once the value chain has been identified, it can be analyzed to determine which activities are most valuable to the company and which ones can be improved. By maximizing the value created at each point in the chain, a company can be better positioned to share more value with customers while capturing a greater share for itself.

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