The document discusses the concept of competitive advantage in firms, emphasizing the importance of unique value-creating activities that contribute to higher profit margins. Michael Porter’s value chain model is presented, comprising primary activities like inbound logistics, operations, outbound logistics, marketing & sales, and service, alongside support activities such as procurement, technology development, human resource management, and firm infrastructure. These elements collectively aim to enhance organizational performance and customer satisfaction.

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2. Description:
A firm operating in an industry always tries to achieve competitive advantage over the rivals. The
competitive advantage is achieved through the unique sets of activities that a firm does. These activities
are modeled in a firm as value creating activities. Michael Porter identified and described some of the
most useful techniques that are common in most of the firms. The model he created then is called as
Value Chain. The value chain model can be seen in the figure below:
The main goal of these activities combined is to generate profit by giving out value that is more than the
cost of the product, resulting in a profit margin.
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Inbound Logistics: it includes the procuring, storing and inventory management of the raw
materials.
Operations: it refers to the process of transferring the raw materials into the final product.
Outbound Logistics: it includes the operations that help in getting the finished products to the
consumers including storing and maintain the inventory.
Marketing & Sales: it encompasses the marketing and promotional activities that attract buyers
to buy the products, for instance, advertising, discounts, pricing etc.
Service: it basically refers to the after sales service operations that are necessary to increase the
customer satisfaction and keep the customers’ loyalty intact. Examples, repair, support services
etc.
All of these activities are very crucial for an organization to achieve a competitive advantage. For
instance, the logistics activities are important for the supplier and distributor networks and after sale
services are important with respect to customer loyalty. These activities in detail are given below which
are necessary for supporting the primary activities in the creation of a value chain.
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3. Support Activities:
There are basically four core support activities that were identified by Porter:
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Procurement: it involves the buying of the raw materials and inputs for product formation.
Technology Development: it describes the technological factors that are necessary for making a
value product, for instance R&D, technology development, research process etc.
Human Resource Management: it includes the activities that are related with the HR functions
of recruiting, training and motivating employees.
Firm Infrastructure: basically tells the foundation principles of firm, for example, finance, legal,
quality management etc.
Reference: http://www.researchomatic.com/Value-Chain-133342.html
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