VALUE CHAIN ANALYSIS.

CONTD.,
 VALUE CHAIN ANALYSIS
 Initially the idea value chain Analysis came from
Michael Porter.
 He offered this model.
 He is an American academician known for his
theories on economics, business strategy, and
social causes. 
VALUE:
 The value is the total amount(i.e., total revenue)
that buyers are willing to pay for a firm’s product.
MARGIN = VALUE CREATED – COST OF
CREATING
VALUE CHAIN:
 It is what the value that created in the
organisation towards its product and services.
 Porter’s value chain focuses on all activities:
 To design
 To Produce
 To market
 To deliver
 And support product and services
 OBJECTIVES:

VCA is a strategy tool used to analyse

Internal firm activities.
Its goal is to recognize which activities
are the most valuable for the firm to
provide competitive Advantage.
It also helps the firm to analyse and
improve their internal operations as well.
PORTER’S VALUE CHAIN MODEL
 PRIMARY ACTIVITIES:
 Primary activities are directly concerned with
creating and delivering a product.
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
After-Sales Service
 Each of this primary activities is linked to
support activities which help to improve their
effectiveness or efficiency.
Supporting Activities:
 Support activities assist the primary activities in
helping the organisation achieve its competitive
advantage.
 There are 4 main areas of Support activities:
 Procurement
 Human Resource Management
 Technology Development (including R&D)
 Infrastructure