Porter's value chain analysis is a strategic tool used to analyze a firm's internal activities. It involves identifying primary activities like inbound logistics, operations, outbound logistics, marketing and sales, and services, as well as support activities like firm infrastructure, human resource management, technology development, and procurement. Michael Porter introduced the generic value chain model in 1985 to help companies understand how they can improve activities to increase margins and competitive advantage.

1. Porter’s Value Chain Analysis
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2. Introduction
❑ Value chain represents the internal activities a firm engages in when transforming
inputs into outputs.
❑ Value Chain Analysis (VCA) is a strategy tool used to analyze firm’s activities by
recognizing which activities are the valuable to the firm and which ones needs to be
improved.
❑ It involves identification of primary and supportive activities that add value to the final
product.
❑ Michael Porter introduced Generic Value Chain Model in 1985.
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3. Porter’s Value
Chain Analysis
Firm Infrastructure
(Financing, Planning, Investor Relation, Organizational Structure)
Human Resource Management
(Recruiting, Training, Compensating, Grievance handling)
Technology Development
(Product Design, Testing Facility, Market Research, Enterprise Resource Planning)
Procurement Resources
(Components, Machinery, Vendor, Advertisement, Services)
Inbound
Logistic
Receiving
Data Storing
Inventory
Control
Transportation
Scheduling
Operations
Manufacturing
Assembly
Testing
Daily Operation
Outbound
Logistic
Warehousing
Order Fulfilment
Dispatch
Transportation
Marketing
And Sales
Advertisement
Selling
Promotion
Pricing
Service
Customer
Service
Upgrading
Training
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4. Primary Activities
▪ Inbound Logistics – Raw Material Handling and Warehousing
▪ Operations – Transforming Inputs into the Final Products
▪ Outbound Logistics – Warehousing and Distribution of Finished Goods
▪ Marketing & Sales – Communication, Pricing and Channel Management
▪ Services – Installation, Repair and After-Sales Support
Primary activities are directly involved in transforming inputs into outputs and in
delivery and after sales support.
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5. Value Chain of LLOYD AC.
PRIMARY
ACTIVITIES
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
and Sales
Services &
Support
Manufacturing of A.C. into a
finished product
Transporting A.C.to Distributors
and Wholesalers
Purchase of Raw Material & Components
▪ Installation
▪ Repair
▪ After Sales Servicing
▪ Segmentation
▪ Targeting
▪ Branding
▪ Pricing
▪ Advertising
▪ Promotional Offers
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6. Porter’s Value
Chain Analysis
Firm Infrastructure
(Financing, Planning, Investor Relation, Organizational Structure)
Human Resource Management
(Recruiting, Training, Compensating, Grievance handling)
Technology Development
(Product Design, Testing Facility, Market Research, Enterprise Resource Planning)
Procurement Resources
(Components, Machinery, Vendor, Advertisement, Services)
Inbound
Logistic
Receiving
Data Storing
Inventory
Control
Transportation
Scheduling
Operations
Manufacturing
Assembly
Testing
Daily Operation
Outbound
Logistic
Warehousing
Order Fulfilment
Dispatch
Transportation
Marketing
And Sales
Advertisement
Selling
Promotion
Pricing
Service
Customer
Service
Upgrading
Training
M
A
R
G
I
N
S
U
P
P
O
R
T
P
R
I
M
A
R
Y
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7. Support Activities
● Firm Infrastructure refers to an organization’s structure and its management, functions,
planning, accounting, finance, quality-control mechanism.
Firms infrastructure can be a powerful factor for competitive advantage.
● Procurement Resources refers to the function of purchasing inputs used in the firm’s value
chain.
This function adds value to the company by employing required inputs and effectively
managing the firm’s cost.
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8. Support Activities
● Technology Development incorporates a wide range of technology-related activities to
improve the product and the process.
Technology development plays a prominent role in differentiating and having competitive
advantage
● Human Resource Management consists of activities involved in recruitment, hiring,
training, development, compensation of all type of human manpower.
It supports both the primary activities and the entire value chain.
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9. ● Cost Advantage
● Competitive Advantage
● Profitability
Need for Value Chain Analysis
Value Chain Competitive Advantage Higher Profitability
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10. ● Firm Infrastructure
○ 800 plants over 200 countries and territories
○ Market Capitalization: $235.35 Billion
○ Advertisement : $5.8 Billion
○ Largest Distribution Network
● Procurement Resources
○ Coca-Cola Bottlers’ Sales and Service
■ Customer Business Solution : a data and service integrator of/for stakeholders
■ Procurement: Navigate external marketplace channels and categories and
supplier insights to solve client needs.
Support Activities: The Coca-Cola Company
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11. ● Technology Development
○ Product Innovation: Sugar free products, Greener packaging
○ Sustainable Innovation: “Zero-Waste Urban Environment”
○ Marketing Innovation: Digital Platform and Big Data Analysis for
accessing customers choice and forming strategies accordingly.
● Human Resource Management
○ Payments and Rewards
○ Employee Engagement Programs
○ Trainings and Education
○ Performance management
Support Activities: The Coca-Cola Company
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12. Thank You !!!
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