7-9 minutes<\/p>\n
Originated in the 1980s by Michael Porter, value chain analysis is the conceptual notion of value-added in the form of a value chain. Value chain analysis is a way to visually analyze a company\u2019s business activities to see how the company can create a competitive advantage for itself. Value chain analysis helps a company understand how it adds value to something and subsequently how it can sell its product or service for more than the cost of adding the value, thereby generating a profit margin. In other words, if they are run efficiently the value obtained should exceed the costs of running them i.e. customers should return to the organization and transact freely and willingly.<\/p>\n
Michael Porter\u2019s Value chain analysis is a process of dividing relevant activities of the business in primary and support activities that an organization performs to deliver something valuable, such as a product or service. Products pass through activities of a chain in order and, at each activity, the product gains some value. And to do so, inputs consumed by the activity and outputs generated are studied, to decrease costs and increase differentiation. Thus, a value chain framework helps organizations to identify the activities that are important for competitiveness.<\/p>\n
Value chain analysis is used as a tool for identifying activities, within and around the firm and relating these activities to an assessment of competitive strength. Michael Porter classified the entire value chain into nine activities that are interrelated to one another. Porter suggested that an organization is split into \u2018primary activities\u2019 and \u2018support activities\u2019.<\/p>\n
The figure below divides activities into primary and support activities as suggested by Porter\u2019s Value Chain Analysis model:<\/p>\n
Edit this Diagram<\/p>\n
Primary Activities: The functions which are directly concerned with the conversion of input into output and distribution activities are called primary activities. It includes:<\/p>\n
Support Activities: Those activities which assist primary activities in accomplishment, support activities. These are:<\/p>\n
In the fast-paced world, the main focus of the organization is customer satisfaction, and value chain analysis is the technique that helps to attain that level. Under this, each business activity is considered as essential, which contributes value and is constantly analyzed, to increase value as regards the cost incurred.<\/p>\n","protected":false},"excerpt":{"rendered":"