Each one of these categories is an opportunity for a company to maximize efficiency and create a competitive advantage. The aim of the value chain is to increase profits by creating value at each of the five touchpoints so that total value exceeds the total costs associated with the product.
Value Chain Michael E. Porter Recommend this article to your friends! If companies are to deliver value to their customers, it is important for companies to understand where value is created, and where value is potentially lost.
The Value Chain put forward by Michael E. Porter is helpful in determining where value is created or lost in terms of the activities performed by the company.
The value chain describes the activities within and around the company that create the final product or service. The cost and value of these activities, will determine whether or not best value products or services are being made that will satisfy the customer.
By evaluating a company with the Value Chain framework, business managers have the opportunity of evaluating their entire business in different activities. This gives managers an opportunity to analyze which activities creates the greatest value, and which activities help to secure competitive advantages.
Likewise, this framework also gives managers the opportunity of analyzing which processes or activities do potentially not add much value. The Value Chain thus helps managers to identify the activities that are especially important for competitiveness and for the attainment of the company's overall strategy.
The value chain is grouped into two main groups of activities: Primary activities are directly concerned with the production or delivery of certain products or services. Support activities help to support the efficiency and effectiveness of primary activities.
Below, each activity in the two main activities are listed Primary Activities.Michael E.
Porter, one of the world's leading authorities on competitive strategy and international competitiveness, is the C. Roland Christensen Professor of Business Administration at the Harvard Business School.
In , Professor Porter was appointed to President Reagan's Commission on Industrial Competitiveness, the initiative that triggered the competitiveness debate in America. The Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive advantage..
Inbound Logistics. Includes receiving, storing, inventory control, transportation scheduling. Operations. Includes machining, packaging, assembly, equipment maintenance, testing and all other value-creating activities that transform.
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Porter, Business Strategy, Primary Activities, Support activities, Business Strategy. A company also can grow by taking over functions forward in the value chain previously provided by final manufacturers, distributors, or retailers ("forward integration").
(s) in the value chain that the company is currently engaged in. choosing to perform activities differently or to perform different activities than rivals to deliver. The agricultural value chain concept has been used since the beginning of the millennium, primarily by those working in agricultural development in developing initiativeblog.comgh there is no universally accepted definition of the term, it normally refers to the whole range of goods and services necessary for an agricultural product to move from the farm to the final customer or consumer.
PORTERS VALUE CHAIN According to Michael Porter value is the chain of activities for a company that operates in a specific industry. For gaining the competitive advantages, Porter suggested that going through the chain of organization activities will add more value to the product and services than the sum of added cost of these activities.