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Running head: VALUE CHAIN ANALYSIS 1
Value Chain Analysis
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VALUE CHAIN ANALYSIS 2
Value Chain Analysis
Value chains are all the activities that products and services in a company undergo from
the time of conception to completion. In light of this, value chain analysis evaluates the value
that each process adds to the finished product. Michael Porter value chain analysis views the
organization as a set of activities that jointly interact to produce the commodity that the
customers want (Kaplinsky & Morris, 2000). Consequently, Porter argues that the ability of each
department to carry out the specific activities and that of the entire organization to link these
activities is the source of competitive advantage for the company.
In addition, Porter distinguishes between primary and support activities in the value chain
process. All primary activities are linked to the support activities in order to improve their
effectiveness and efficiency. Primary activities can be grouped into five main categories, namely
inbound logistics, operations, outbound logistics, marketing and sales, and service. Support
activities are composed of procurement, technological developments, human resource
management, and infrastructures such as finance, planning, and quality control. Margins refer to
the profit margins that organizations make due to their ability to link all activities in the value
chain process.
Table 1
Porter Value Chain Model
Support
Activities
Infrastructure
Margin
Human Resource Development
Technology Development
Procurement
Primary
Inbound
Operations
Outbound
Marketing
Service
Margin

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Running head: VALUE CHAIN ANALYSIS Value Chain Analysis Student’s Name Institution Name 1 VALUE CHAIN ANALYSIS 2 Value Chain Analysis Value chains are all the activities that products and services in a company undergo from the time of conception to completion. In light of this, value chain analysis evaluates the value that each process adds to the finished product. Michael Porter value chain analysis views the organization as a set of activities that jointly interact to produce the commodity that the customers want (Kaplinsky & Morris, 2000). Consequently, Porter argues that the ability of each department to carry out the specific activities and that of the entire organization to link these activities is the source of competitive advantage for the company. In addition, Porter distinguishes between primary and support activities in the value chain process. All primary activities are linked to the support activities in order to improve their effectiveness and efficiency. Primary activities can be grouped into five main categories, namely inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are composed of procurement, technological developments, human resource management, and infrastructures such as finance, planning, and quality control. Margins refer to the profit margins that organizations make due to their ability to link all activities in the value chain process. Table 1 Porter Value Chain Model Support Infrastruc ...
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