<\/span><\/h2>\nMichael Porter’s value chain attempts to analyze the activities a firm undertakes to create value and deliver products or services to customers.<\/p>\n
The value chain consists of two primary types of activities: primary activities and support activities. Primary activities are directly involved in the creation and delivery of the product or service, while support activities provide the infrastructure and resources necessary for the primary activities to operate efficiently.<\/p>\n
The primary activities in the value chain include inbound logistics, operations, outbound logistics, marketing and sales, and service. Inbound logistics involve receiving, storing, and distributing inputs for the organization. Operations include all the activities that transform the inputs into the final product or service. Outbound logistics involve the collection, warehousing, and distribution of the final product to customers. Marketing and sales activities encompass promoting and selling the product or service to customers. Lastly, service activities are aimed at maintaining and enhancing the value of the product or service after it has been sold.<\/p>\n
On the other hand, support activities facilitate the effectiveness and efficiency of the primary activities. These support activities include procurement, technology development, human resource management, and infrastructure. Procurement involves sourcing and purchasing the inputs required for the organization’s operations. Technology development focuses on upgrading and integrating technology within the firm. Human resource management is responsible for recruiting, training, and retaining employees. Lastly, infrastructure encompasses general management, planning, finance, and other activities that support the entire value chain.<\/p>\n
By analyzing each activity and its associated costs, Porter’s value chain enables businesses to identify areas where cost savings can be made and where differentiation strategies can be implemented. It helps organizations understand their competitive advantage by determining which activities they perform better than their competitors and which areas require improvement.<\/p>\n