A Value Chains is a business concept, and a framework for analyzing value driven interrelationships.
Every firm, every organization, has its own value chain that links it to suppliers, customers, and other stakeholders. Each element of the value chain can be interlinked in multiple ways with others. For example, the "Outbound Logistics" element of Federal Express is linked to the "Inbound Logistics" elements of the package recipients.
According to Porter (1985), the primary value chain activities are:
- Inbound Logistics - involve relationships with suppliers and include all the activities required to receive, store, and disseminate inputs.
- Operations - are all the activities required to transform inputs into outputs (products and services).
- Outbound Logistics - include all the activities required to collect, store, and distribute the output.
- Marketing and Sales - activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.
- Service - includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.
The secondary value chain activities, which supprt the primary activities, are:
Source: Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York. ISBN 0684841460
- Procurement - is the acquisition of inputs, or resources, for the firm.
- Human Resource management - consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
- Technological Development - pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.
- Infrastructure - serves the company's needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management.
See Also Developer Value Chain, Fire Fox Value Chain
( Topic last updated: 2006.06.28 09:29:13 PM )