DEPARTMENT OF MANAGEMENT SCIENCES

BBA IV AAWKUM

THE VALUE CHAIN

Definition:“A value chain is the whole series of

activities that create and build value at every step.”

OR“A high-level model of how businesses

receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers.”

CONCEPT BY: Michael Porter  in his 1985

book 'Competitive Advantage'.

What is the value chain made of? • 5 PRIMARY ACTIVITIES &• 4 SECONDARY / SUPPORT

ACTIVITIES.

PORTER’S VALUE CHAIN:

PRIMARY ACTIVITIES:1. INBOUND LOGISTICS: Involve relationships with

suppliers and include all the activities required to receive, store, and distribute inputs.

2. OPERATIONS: All the activities required to transform inputs into outputs (products and services).

3. OUT BOUND LOGISTICS: Include all the activities required to collect, store, and distribute the output.

4. MARKETING & SALES:   Inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.

5. SERVICE: Includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.

SUPPORT ACTIVITIES:1. PROCUREMENT: The acquisition of inputs, or

resources, for the firm.

2. HR: All activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.

3. TECHNOLOGICAL DEVELOPMENT: Equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.

4. INFRASTRUCTURE: covers planning , finance , accounting and government affairs.

Example: WAL MART

TO BE A SUCCESSFUL FIRM:

NEED TO LOOK FOR COMPETITIVE ADVANTAGES BEYOND ITS OWN OPERATIONS INTO THE VALUE CHAINS OF SUPPLIERS , DISTRIBUTORS & CUSTOMES.

Any

questions

THANKS