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  • The Value Chain: Key Concepts

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    Giovanni Altamirano
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    The value chain is a tool developed by Michael Porter for disaggregating a company into its strategically relevant activities in order to identify sources of competitive advantage. It focuses on analyzing the specific activities that result in either higher prices or lower costs. A company's value chain is part of a larger value system that includes suppliers and distribution channels upstream and downstream. Analyzing each activity as a step that adds value helps managers consider activities not just as costs but as value-creating processes. The value chain and its activities are the basic units for analyzing competitive advantage, and strategy is reflected in how activities are configured and linked together in the value chain.

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    The Value Chain Hbr

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    The value chain is a tool developed by Michael Porter for disaggregating a company into its strategically relevant activities in order to identify sources of competitive advantage. It focuses on analyzing the specific activities that result in either higher prices or lower costs. A company's value chain is part of a larger value system that includes suppliers and distribution channels upstream and downstream. Analyzing each activity as a step that adds value helps managers consider activities not just as costs but as value-creating processes. The value chain and its activities are the basic units for analyzing competitive advantage, and strategy is reflected in how activities are configured and linked together in the value chain.

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    19 views2 pages

    The Value Chain: Key Concepts

    Uploaded by

    Giovanni Altamirano
    The value chain is a tool developed by Michael Porter for disaggregating a company into its strategically relevant activities in order to identify sources of competitive advantage. It focuses on analyzing the specific activities that result in either higher prices or lower costs. A company's value chain is part of a larger value system that includes suppliers and distribution channels upstream and downstream. Analyzing each activity as a step that adds value helps managers consider activities not just as costs but as value-creating processes. The value chain and its activities are the basic units for analyzing competitive advantage, and strategy is reflected in how activities are configured and linked together in the value chain.

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    THE VALUE CHAIN

    http://www.isc.hbs.edu/strategy/business-strategy/Pages/the-valuechain.aspx

    Strategists aim to shift relative price or relative cost in a companys favor,


    to achieve competitive advantage. But how? By making choices about the
    hundreds of activities companies perform as they compete.

    The Value Chain


    DevelopedbyMichaelPorterandusedthroughouttheworld
    fornearly30years,thevaluechainisapowerfultoolfor
    disaggregatingacompanyintoitsstrategicallyrelevant
    activitiesinordertofocusonthesourcesofcompetitive
    advantage,thatis,thespecificactivitiesthatresultinhigher
    pricesorlowercosts.
    Acompanysvaluechainistypicallypartofalargervalue
    systemthatincludescompanieseitherupstream(suppliers)
    ordownstream(distributionchannels),orboth.This
    perspectiveabouthowvalueiscreatedforcesmanagersto
    considerandseeeachactivitynotjustasacost,butasastep
    thathastoaddsomeincrementofvaluetothefinished
    productorservice.

    Key Concepts
    ACTIVITIES
    The value chain is the activities involved in delivering value to customers.
    COMPETITIVE ADVANTAGE
    The activities, and the overall value chain in which activities are
    embedded, are the basic units of competitive advantage.

    SET OF CHOICES
    Strategy is reflected in the set of choices about how the activities in the
    value chain are configured and linked together.

    The Value Chain

    BEST PRACTICES & THE VALUE CHAIN


    Integrating best practices into the value chain is essential. But doing
    things effectively is not the same as doing things differently.
    OPERATIONAL EFFECTIVENESS VS. STRATEGY

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