What is value chain analysis by Michael Porter?

The value chain also known as Porter’s Value Chain Analysis is a business management concept that was developed by Michael Porter. In his book Competitive Advantage (1985), Michael Porter explains that a value chain is a collection of activities that are performed by a company to create value for its customers.

Who created the value chain analysis?

Michael Porter
Developed by Michael Porter and used throughout the world for nearly 30 years, the value chain is a powerful tool for disaggregating a company into its strategically relevant activities in order to focus on the sources of competitive advantage, that is, the specific activities that result in higher prices or lower …

Who created Porter’s value chain?

Michale Porter
Key Takeaways. Michale Porter created a tool for analyzing a company’s value chain. The value chain is the systems that a company uses to make money. Porter (who is known for Porter’s five forces) wrote his book Competitive Advantages in 1985, which laid out his method of analyzing value chains.

What is a value chain PDF?

A value chain includes the activities that take place within a company in order to deliver a valuable product or service to their market. Each stage of the value chain adds more value. The value chain provides a tool to visualize a firm’s productivity by identifying the thousands of discrete activities involved.

What are the 5 primary activities of a value chain PDF?

Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service.

How is value created?

Value creation definition. The definition of value creation is giving something valuable to receive something else that’s more valuable to you. This definition is broad and captures both costs and benefits. Further, it applies to owners, customers, and employees, as I’ll describe later.

How do you create a value chain model?

Below are the general steps it takes to create a value chain analysis.

1. Determine the business’ primary and support activities. Together, the primary and support activities make up the value chain.
2. Analyze the value and cost of the activities.
3. Identify opportunities to gain a competitive advantage.

How do you create a value chain diagram?

Five steps to developing a value chain analysis

1. Step 1: Identify all value chain activities.
2. Step 2: Calculate each value chain activity’s cost.
3. Step 3: Look at what your customers perceive as value.
4. Step 4: Look at your competitors’ value chains.
5. Step 5: Decide on a competitive advantage.

What are the primary activities of Michael Porter’s Value chain?

Inbound logistics. This includes the warehousing and associated inventory control of raw materials. This also includes the nature of the relationship with suppliers.

Operations. Operations encompass any process that turns raw materials into a finished product ready for sale,including labelling,branding,and packaging.

Outbound logistics. Outbound logistics concern any process where the product is distributed to a customer.

Marketing and sales. Any processes that attempt to enhance product visibility among a target audience are included in marketing and sales.

Services. Services include any processes that occur after a purchase has been made,including customer service,repairs,refunds,and warranty acknowledgement.

What is Michael Porter’s industry analysis model?

Michael Porter developed the Five Forces Model in 1980. Michael Porter’s Five Forces is a powerful competitive analysis tool to determine the principal competitive influence in a market. It is a broadly used model in business that refers to the five important factors that drive a firm’s competitive position within an industry.

What is the Michael Porter competitive advantage?

What is the Michael Porter Competitive Advantage? The competitive advantage of Michael Porter states that there are three main ways to position yourself in the market above competitors: lower prices, differentiation and focus. Michael Porter is an American economist, professor and researcher at Harvard University.

What is Porter Value chain analysis?

Value chain analysis process. Porter’s generic strategies above are just one element of the value chain model. They are a starting point, and are intended to be seen as general guidelines for understanding how to approach gaining a competitive advantage (hence the name).