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DEPARTMENT OF
MANAGEMENT SCIENCES
BBA IV A
AWKUM
Definition:
“A value chain is the whole series of activities that
create and build value at every step.”
OR
“A high-level model of how businesses receive raw
materials as input, add value to the raw materials
through various processes, and sell finished
products to customers.”
CONCEPT BY:
Michael Porter in his 1985 book
'Competitive Advantage'.
What is the value chain made of?
• 5 PRIMARY ACTIVITIES
&
• 4 SECONDARY / SUPPORT ACTIVITIES.
PORTER’S VALUE CHAIN:
PRIMARY ACTIVITIES:
1. INBOUND LOGISTICS: Involve relationships with suppliers
and include all the activities required to receive, store, and
distribute inputs.
2. OPERATIONS: All the activities required to transform inputs
into outputs (products and services).
3. OUT BOUND LOGISTICS: Include all the activities required
to collect, store, and distribute the output.
4. MARKETING & SALES: Inform buyers about products and
services, induce buyers to purchase them, and facilitate their
purchase.
5. SERVICE: Includes all the activities required to keep the product
or service working effectively for the buyer after it is sold and
delivered.
SUPPORT ACTIVITIES:
1. PROCUREMENT: The acquisition of inputs, or
resources, for the firm.
2. HR: All activities involved in recruiting, hiring, training,
developing, compensating and (if necessary) dismissing
or laying off personnel.
3. TECHNOLOGICAL DEVELOPMENT: Equipment,
hardware, software, procedures and technical
knowledge brought to bear in the firm's
transformation of inputs into outputs.
4. INFRASTRUCTURE: covers planning , finance ,
accounting and government affairs.
Example: WAL MART
TO BE A SUCCESSFUL FIRM:
NEED TO LOOK FOR COMPETITIVE ADVANTAGES
BEYOND ITS OWN OPERATIONS INTO THE VALUE
CHAINS OF SUPPLIERS , DISTRIBUTORS &
CUSTOMES.
Value chain
Value chain

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Value chain

  • 2.
  • 3. Definition: “A value chain is the whole series of activities that create and build value at every step.” OR “A high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers.” CONCEPT BY: Michael Porter in his 1985 book 'Competitive Advantage'.
  • 4. What is the value chain made of? • 5 PRIMARY ACTIVITIES & • 4 SECONDARY / SUPPORT ACTIVITIES.
  • 6. PRIMARY ACTIVITIES: 1. INBOUND LOGISTICS: Involve relationships with suppliers and include all the activities required to receive, store, and distribute inputs. 2. OPERATIONS: All the activities required to transform inputs into outputs (products and services). 3. OUT BOUND LOGISTICS: Include all the activities required to collect, store, and distribute the output. 4. MARKETING & SALES: Inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase. 5. SERVICE: Includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered.
  • 7. SUPPORT ACTIVITIES: 1. PROCUREMENT: The acquisition of inputs, or resources, for the firm. 2. HR: All activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel. 3. TECHNOLOGICAL DEVELOPMENT: Equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs. 4. INFRASTRUCTURE: covers planning , finance , accounting and government affairs.
  • 9.
  • 10. TO BE A SUCCESSFUL FIRM: NEED TO LOOK FOR COMPETITIVE ADVANTAGES BEYOND ITS OWN OPERATIONS INTO THE VALUE CHAINS OF SUPPLIERS , DISTRIBUTORS & CUSTOMES.