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In the figure dotted lines represent linkages between a support activity and a primary activity.
Porter’s Value Chain Analysis: There are four basic steps that have to be followed if you wish to use the Value Chain as an analysis model.
By following these basic steps the organization can be analyzed using the Value Chain.
These activities create value using innovation and optimization.
These are all the support activities related to procurement to service the customer from the organization.
Primary activities have an immediate effect on the production, maintenance, sales and support of the products or services to be supplied.
These activities consist of the following elements: These are all processes that are involved in the receiving, storing, and internal distribution of the raw materials or basic ingredients of a product or service.These activities relate to the development of the products and services of the organization, both internally and externally.Examples are IT, technological innovations and improvements and the development of new products based on new technologies.After reading you will understand the basics of this powerful management tool.Value Creation creates added value which leads to competitive advantage.This will also have to be done for the other support activities.This is a crucial and time-consuming step because this is about finding the links between the added value you have identified.Ultimately, added value also creates a higher profitability for an organization.The strength of the Porter’s Value Chain Analysis is its approach.This concerns the support activities within the organization that enable the organization to maintain its daily operations.Line management, administrative handling, financial management are examples of activities that create value for the organization.