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Michael Porter's Value Chain - 50MINUTES.COM

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KEY INFORMATION

Names: value chain, Michael Porter’s value chain.

Uses: improving competitiveness, reducing costs, increasing value creation.

Why is it successful? It can be adapted to all types of business, drastically boosts performance and comprises a series of clear, well-defined steps.

Key words: competitive advantage, value creation, analytical tool, subdivision of activities.

INTRODUCTION

History

The Harvard Business School professor Michael E. Porter (born in 1947) is known for his work on competitive strategy, competitiveness and the economic development of nations, states and regions.

In the 1980s, he began looking into the concept of competitive advantage and developed a number of strategic theories in the book Competitive Advantage: Creating and Sustaining Superior Performance (1985). Many of these theories were quickly adopted by businesses looking to improve their results.

According to him, companies achieve superiority through their mastery of competitive forces, known as Porter’s five forces. This is a key concept in modern management, and was explored by Porter in Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980; republished with a new introduction in 1998).

Definition of the model

A value chain is a series of actions which are carried out in order to deliver a valuable product or service to the market.