What is a Value Chain?

A value chain is a business model in which actions and processes within a company add value to its products or services for customers. These actions and processes can include research and development, production, marketing, distribution, and customer service. Each step in the value chain helps to differentiate a company's offering from competitors and drive profits. By analyzing the activities within the value chain, a company can pinpoint areas for improvement and increase overall efficiency. This can ultimately lead to increased competitiveness and profitability in the market. Understanding and managing the value chain is important for businesses looking to gain a competitive advantage in their industry.

The primary activities in the value chain are: inbound logistics, operations, outbound logistics, marketing and sales, and service.

The support activities in the value chain are: procurement, technology development, human resources management, and firm infrastructure.

Inbound logistics refers to the acquisition and storage of raw materials. Operations are the processes that transform the raw materials into finished products. Outbound logistics refers to the distribution of the finished products to customers. Marketing and sales is responsible for creating demand for the product and generating revenue. Service is responsible for providing after-sales support, such as maintenance and repairs.

Procurement is the process of acquiring goods and services. Technology development is responsible for creating and improving the technology used in the production process. Human resources management is responsible for managing the workforce. Firm infrastructure includes the administrative and support functions of the organization, such as accounting, legal, and information systems.