Value chain

By:- Hussain Padrawala

Urvisha duhlani
Jaydeep jadhav
Gaurang jadhav
Chetan rajput

INTRODUCTION

A value chain is a chain of activities that a firm operating in a

specific industry performs in order to deliver a valuable product or
service for the market. The concept comes from business

management and was first described and popularized by Michael

Porter in his 1985 best-seller, Competitive Advantage: Creating and
Sustaining Superior Performance.

VALUE CHAIN AND THE QCT TRIANGLE

VC allows alignment of processes with customers. This

generates a quality advantage.

VC focuses cost management efforts.

VC provides for efficient processes which improves the

timeliness of operations.

VALUE CHAIN MODEL

FROM MICHAEL E. PORTERS COMPETITIVE ADVANTAGE
SUPPORT
ACTIVITIES

Firm Infrastructure (General Management)

Human Resource Management
Technology Development
Procurement
Inbound
Logistics

Ops.

Outbound
Logistics

PRIMARY ACTIVITIES

Sales &
Marketing

Service and
Support

VALUE CHAIN ELEMENTS

Customer value added

Margin orientation
Primary activities
Inbound logistics
Operations
Outbound logistics
Sales and marketing
Service and support
Support Activities
Human resources (general and admin.)
Tech. development
Procurement

VALUE CHAIN ANALYSIS

Document the activities

Understand the cost and margins at each step.

Map the value chain to the industry value chain

Use Activity Based Costing

Look for core competencies

Map the cost structure

external values drive cost advantages

VALUE CHAIN BENEFITS

Identifies value processes

Identifies areas for cost improvement

Reduce Delivery Times

Optimize Inventory

Improve Customer Relationships

Enhance Revenue and Profit

GOAL OF VALUE CHAIN

Driven by customer perceptions

Increase margins

Focus on value processes

Distinctive capabilities

Cost advantages

Some examples

Intel Corporation

MacDonald's

VALUE CHAIN AND THE TBC TRIANGLE

Technical:

Increases knowledge of no profit zones

Increases knowledge of forward and/or backward integration

opportunities

Identifies value processes

Identifies win-win alliance opportunities

Behavioral:

Focus shifts to the customer

Focus shifts from conflict to partnering with customers & suppliers

Cultural

Creates externally focused mindset

Generates information sharing environment with respect for

confidentiality

Value Chain Analysis helps you identify the ways in which you
create value for your customers, and then helps you think
through how you can maximize this value: whether through

superb products, great services, or jobs well done.