VALUE CHAIN ANALYSIS

Gautam Siddharth Div-A 11020241017

What is Value Chain Analysis?

y Value Chain is defined as the set of activities that an

organization carries out to create value for its customers. y First defined by Michael Porter in the Year 1985 in his book The Competitive Advantage. y Value Chain analysis describes the activities within and around the organization and relates them to the analysis of the competitive strengths of the organization.

y Porter proposed a general-purpose value chain to help

the companies examine and connect their activities y According to him, the way in which these activities are performed determines costs and subsequently profits y The ultimate aim is to help the managers find the sources of value for their organizations

THE PORTER MODEL

FEATURES OF THE MODEL

y Divides the activities of the company into Primary and y y -

Secondary activities Primary activities relate directly to the creation, sale, maintenance and support of a product or service. Consist of Inbound Logistics Operations Outbound Logistics Marketing and Sales Service

y The activities that help the Primary activities in y y

improving their efficiency are called secondary activities. Consist of Procurement Technology Infrastructure management Human Resource Management Margin refers to the profit margin that organizations realize depending on their ability to manage the linkages.

LIMITATIONS OF PORTERS MODEL

y The model laid out by Porter is not really effective for

non-manufacturing organizations. y The scale and scope of value chain analysis is so huge that it requires a lot of work to finish a value chain analysis for an organizations and its rivals.

REFERENCES
y http://www.mindtools.com/pages/article/newSTR_6

6.htm y http://www.fao.org/fileadmin/user_upload/fisheries/ docs/ValueChain.pdf