Porter’s Value Chain Analysis Primary & Secondary Activity

Wed, 04/02/2014 - 04:48 -- Gulzar Ahmed

What is Michael Porters Value Chain Analysis

A value chain refers to the whole series of activities that create and build value at every step for a particular company. The concept of value chain analysis is developed by Michael Porter in 1980 in his very famous book 'Competitive Advantage'. Value chain analysis used to analyze those specific activities which can create competitive advantages for a company. In simple words we can say that the value chain analysis separates useful and effective activities from the wasteful activities and provide a better chance to the companies for getting competitive advantage. So the main goal of value chain analysis is to know about those activities which creates value that exceed the cost of providing products and services, and generate a profit margin for the companies.

Types of Activities in Porter’s Value Chain Model

Porter’s value chain model is made up of primary and support activities. So here in this article I would discuss both types of activities.

porter's value chain analysis template

Primary Activities of Value Chain

  1. Inbound Logistics refers to getting the material as an input for adding value by processing it. This also includes relationships with suppliers and all other activities that are required by a company to receive raw material or input, store, and disseminate it.
  2. Operations refer to the manufacturing process and it includes all the activities that are required to transform raw material (inputs) into final products (outputs).
  3. Outbound Logistics refers to the distributions of final products to the point of sale. This includes all those activities that are required to collect, store, and distribute the final products.
  4. Marketing & Sales refers to how to sale and promote final products. This includes those activities required to inform customers about products and services, motivate or induce customers to purchase them, and facilitate customer their purchase.
  5. Service refers to the activities which maintain the functionality of a product.  These are the activities required to keep the product or service working effectively for the customers after it is sold and delivered to them.

Supportive or Secondary Activities of Value Chain

  1. Firm infrastructure allows managers to monitor the environment well. This consists of different activities or departments such as finance, planning, public affairs, government relations, quality assurance and legal and quality management etc.
  2. Procurement refers to the acquisition of raw materials and other inputs, or required resources, for the company to create value.
  3. Human Resource management it is the development of skills those are needed to steer the company well. This includes all those activities associated with hiring, training, development and compensation of employees.
  4. Technological Development means activities which can give the firm speed, accuracy and quality. This pertains to research and development, process automation, and all other procedures and technical knowledge used to support the value chain activities.

How to Use Porter’s Value Chain

Related pages

what is deductive theorydefine marketing segmentationindustrialized meaningdefine pakistani culturedictatorship leadership stylenegatives of capitalismmax weber sociological theorypiaget theory definitionunitary government vs federal governmentendogamousmax weber bureaucracy theory advantages disadvantagesdef of capitalismthe incest taboo is an example ofblake & mouton managerial gridmax weber definition of social classdefination of dictatorshipmeaning sole proprietorshipfolkways patternsdisadvantages of idealismsender encoder decoder receiveris culture biologically inheritedricardian theory of rent with diagramdefine selection in hrmadvantages and disadvantages of organizational structuresinteract meaning in hindimodern injusticesansoff matrixdifferent forms of democracymax weber bureaucratic theory of managementib economics definitionsvalues of audio visual aidspopular sovereignty short definitionbarter defbcg approach in strategic managementtype of nonprobability samplingtalent etymologybenefits of mncspopulation geography and demographyteaching learning material in hindithe managerial grid modelexample of segmented pricingsocial solidarity sociology definitionbarter system wikidefiniton of bartermax weber concept of bureaucracyadvantages and disadvantages of statistical quality controldownfalls of capitalismdisadvantages of colonialism in africadefinition of emotional barrierslatin educaredefine hypothesedefine incentdefine ethnocentric approachsigmund freud model of personalitytotalitarian dictatorship countriessigmund freud sex theoriesadvantages of classical conditioningimportance of federalismorigin of jurisprudenceimpression management examples in sociologyindifferent curvesmanagerial grid of blake and moutondecoded meaningdefine mainframesteps in formulating a research problemanalytical jurisprudencetype of marketing segmentationin a capitalistic economydefine supply curve in economicsfactors affecting economies of scaletrade cycle economicsfactors affecting strategy formulationdefinition of propaganda in literaturetotalitarian dictatorship is a form of this type of governmentmacro environment componentsdefinition of colonialism