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Value Chain Topic

The document discusses Michael Porter's value chain model. [1] It provides a history of the value chain concept introduced by Porter in 1985. [2] The value chain is defined as a set of interrelated activities a company uses to create value at each step from raw materials to the final product or service. [3] Porter's value chain model includes primary activities like inbound logistics, operations, outbound logistics, marketing and sales, and services, as well as secondary activities such as procurement, human resource management, infrastructure, and technology development.

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Sheen Lerry W. Gealon
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71 views

Value Chain Topic

The document discusses Michael Porter's value chain model. [1] It provides a history of the value chain concept introduced by Porter in 1985. [2] The value chain is defined as a set of interrelated activities a company uses to create value at each step from raw materials to the final product or service. [3] Porter's value chain model includes primary activities like inbound logistics, operations, outbound logistics, marketing and sales, and services, as well as secondary activities such as procurement, human resource management, infrastructure, and technology development.

Uploaded by

Sheen Lerry W. Gealon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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VALUE

CHAIN
LEARNING OBJECTIVES

You are going to know the history behind Value Chain


You will understand the Value Chain
Understand Porter's Value Chain
Discuss the Value Chain Analysis
History
Michael E. Porter, of Harvard Business School, introduced in 1985 the concept value
chain in his book, Competitive Advantage: Creating and Sustaining Superior
Performance.

He wrote: “Competitive advantage cannot be understood by looking at a firm as a whole.


It stems from the many discrete activities a firm performs in designing, producing,
marketing, delivering and supporting its product. In other words its important to
maximize value at each specific point in a firm’s processes.
What is a Value Chain
Value Chain

Value chain is a set of interrelated operating


activities a company uses to create a competitive
advantage, it is where businesses creates and build
value in every step of the process of converting raw
materials into finished goods.

The value chain provides a useful tool for managers


to examine systematically where value may be
added to their organizations. This tool is useful in
that it examines key elements in the production of
a good or service, as well as areas in which value
may be added in support of those primary
activities.
Value chain management (VCM) involves analyzing
Value Chain every step in the process ranging from the
handling of raw materials to end users providing
Management them with the greatest value with the lowest cost
(Koontz and Weihrich, 2007).
Value Chain
Primary Activities

1. Inbound logistics- include the receiving, warehousing, and inventory


control of a company's raw materials.

2. Operations-include procedures for converting raw materials into a


finished product or service.

3. Outbound Logistics- all activities to distribute a final product to a


consumer are considered outbound logistics.

4. Marketing and Sales- strategies to enhance visibility and target


appropriate customers—such as advertising, promotion, and pricing—are
included in marketing and sales.

5. Services- this includes activities to maintain products and enhance


consumer experience—customer service, maintenance, repair, refund,
and exchange.
Secondary Activities

1. Procurement- is the acquisition of inputs, or resources, for the firm.


This is how a company obtains raw materials, thus, it includes finding
and negotiating prices with suppliers and vendors.

2.Human Resource Management- hiring and retaining employees who


will fulfill business strategy, as well as help design, market, and sell the
product.

3. Infrastructure covers a company's support systems and the functions


that allow it to maintain operations.

4.Technological development is used during research and development


and can include designing and developing manufacturing techniques
and automating processes.
Key Takeaways
Value Chain was introduced in 1985 by Michael E. Porter in his book Competitive

Advantage: Creating and Sustaining Superior Performance.

Value chain is a set of interrelated operating activities a company uses to create a

competitive advantage.

Value chain management (VCM) involves analyzing every step in the process ranging

from the handling of raw materials to end users.

Value Chain Model or Porter Value Chain consist of primary and secondary activities.

Primary activities are the following: inbound logistics, operation, outbound logistics,
Briefly elaborate on Briefly elaborate on
what you want to discuss. what you want to discuss.
marketing and sales and services. Secondary activities composes of procurement,

human resource management, technological development and infrastracture.


Thank

you!

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