Scribd
Upload
2 views

Lecture-3-Value Chain

The document outlines Michael Porter's value chain framework, which consists of five primary activities (inbound operations, operations, outbound logistics, marketing and sales, and service) and four support activities (procurement, human resource management, technology development, and company infrastructure) aimed at enhancing the value of products or services. It emphasizes the importance of analyzing these activities to identify inefficiencies, optimize processes, and gain a competitive advantage. Conducting a value chain analysis can help organizations make informed decisions, understand interdependencies, and improve overall performance.

Uploaded by

030 Jesin Akter
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
2 views

Lecture-3-Value Chain

The document outlines Michael Porter's value chain framework, which consists of five primary activities (inbound operations, operations, outbound logistics, marketing and sales, and service) and four support activities (procurement, human resource management, technology development, and company infrastructure) aimed at enhancing the value of products or services. It emphasizes the importance of analyzing these activities to identify inefficiencies, optimize processes, and gain a competitive advantage. Conducting a value chain analysis can help organizations make informed decisions, understand interdependencies, and improve overall performance.

Uploaded by

030 Jesin Akter
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

E- commerce

Michael Porter- Value Chain

# A value chain is a step-by-step business model for transforming a product or service from
idea to reality.
# A value chain is a concept describing the full chain of a business's activities in the creation of
a product or service.
#The intent of value chain is to increase the value of product or service.

The value chain framework is made up of five primary activities and four secondary
activities.
Five primary activities
1. inbound operations,
2. operations,
3. outbound logistics,
4. marketing and sales,
5. service

Four Support activities


1. procurement and purchasing,
2. human resource management,
3. technological development and
4. company infrastructure.
Primary activities contribute to a product or service's physical creation, sale,
maintenance and support.

 Inbound operations: The internal handling and management of resources


coming from outside sources -- such as external vendors and other supply
chain sources. These outside resources flowing in are called "inputs" and
may include raw materials.
 Operations : Activities and processes that transform inputs into "outputs"
// Transforming raw materials into final products//-- the product or service
being sold by the business that flow out to customers. These "outputs" are
the core products that can be sold for a higher price than the cost of
materials and production to create a profit.
Operations activities includes- manufacturing, assembling, testing,
packaging etc.
 Outbound logistics: The delivery of outputs to customers.
Processes involve systems for storage, collection and distribution to
customers. This includes managing a company's internal systems
and external systems from customer organizations.
 Marketing and sales: Activities such as advertising, Promotional
activities and brand-building, which seek to increase visibility, reach a
marketing audience and communicate why a consumer should
purchase a product or service.
 Service: Activities such as customer service and product support,
which reinforce a long-term relationship with the customers who have
purchased a product or service.
Secondary activities- Coordinating and helping the main activities to run
company function smoothly.

The following secondary activities support the various primary activities:


 Procurement and purchasing: Finding new external vendors, maintaining
vendor relationships, and negotiating prices and other activities related to bringing
in the necessary materials and resources used to build a product or service.
 Human resource management: The management of human capital. This
includes functions such as hiring, training, building and maintaining an
organizational culture; and maintaining positive employee relationships.
 Technology Development: Activities such as research and development, IT
management and cybersecurity that build and maintain an organization's use of
technology.
 Company Infrastructure: Necessary company activities such as legal, general
management, administrative, accounting, finance, public relations and quality
assurance.
Benefits of value chains
The value chain framework helps organizations, understand and evaluate sources of
positive and negative cost efficiency. Conducting a value chain analysis can help
businesses in the following ways:

 Support decisions for various business activities.


 Diagnose points of ineffectiveness for corrective action.
 Understand linkages and dependencies between different activities and areas in the
business. For example, issues in human resources management and technology can
permeate nearly all business activities.
 Optimize activities to maximize output and minimize organizational expenses.
 Potentially create a cost advantage over competitors.
 Understand core competencies and areas of improvement.
 Invest more or eliminate.

You might also like