Advantages and Disadvantages of Value Chain Analysis

Application of value chain analysis offers the following advantages:

1. Value chain analysis can play an instrumental role in terms of detecting organizational, tactical
and strategic issues related to the business.

2. The tool assists businesses to appreciate potential sources of competitive advantage.

3. The strategic framework can be applied to any type of business regardless of the industry and
the size of the business.

As it is the case with any other theoretical framework or model, the concept of value chain is not
free from limitations. These can be summarized into the following points:

1. The framework assumes that it is possible to achieve a clear separation of company operations
into different primary and support activities. This may not be the case in real life taking into
account increasing level of complexity of business operations.

2. Application of the tool in practice can be overly time-consuming process, since it requires a
comprehensive analysis of all business operations.

3. It may be difficult to find all the required information in order to conduct value chain analysis
in an appropriate manner.