Porter’s value chain is a framework developed by Michael Porter to analyze and describe the specific activities that businesses perform in order to create value for their customers. The value chain concept divides a company’s operations into primary and support activities, each of which contributes to the overall value of the company’s products or services.
The primary activities of the value chain include:
- Inbound logistics: The activities involved in receiving and storing raw materials and other inputs to the production process.
- Operations: The activities involved in transforming the inputs into finished products or services.
- Outbound logistics: The activities involved in storing and distributing the finished products or services to customers.
- Marketing and sales: The activities involved in promoting and selling the products or services to customers.
- Service: The activities involved in providing after-sales support and service to customers.
The support activities of the value chain include:
- Procurement: The activities involved in sourcing and purchasing the inputs to the production process.
- Technology development: The activities involved in research and development, as well as the use of technology to improve operations and products.
- Human resource management: The activities involved in managing and developing the workforce, including recruiting, training, and compensation.
- Infrastructure: The activities involved in supporting the primary activities, such as accounting, legal, and administrative functions.
By understanding and analyzing the value chain, businesses can identify areas where they can improve efficiency, reduce costs, and add value for their customers.