It is a set of activities that an organization carries out to create value. Value chain analysis is mentioned extensively in the first half of the book competitive advantage in 1985 by michael porter. Value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the business. The value chain analysis describes the activities the organization performs and links them to the organizations competitive position porter. Value chain analysis of procter and gamble case study value chain analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Tanzania tourism value chain study final report june 2009 in association with braeside gardens, lavington po box 43483, nairobi 00100 tel. Porter s value chain activities diagram in powerpoint 2010. The value chain was designed by michael porter in 1985 as a systematic way to examine how competitive advantage develops and to identify where value is added in an organisation. Each step in the manufacture of a product or the delivery of a service can be thought of as a link in a chain that adds value. This interview guide, interview guide for value chain analysis is conducted with value chain participants at all levels of the chain, and is designed to. He offers viewing a firm as a sequential procedure of value creating actions as a means of a influential conceptual tool for thoughtful the building slabs of competitive advantage. Using porters value chain the marketing study guide.
An analysis of the value chain rather than value added is the appropriate way to examine competitive advantage. Porters value chain analysis porters value chain and information system name of the writer name of the institution porters value chain and information system. The following presents an interview guide used in undertaking value chain analysis. Porters value chain analysis by michael porter toolshero. Illustrative interview guides for value chain analysis. Value chain michael porter was the first person who introduced the term value chain in his book competitive advantage. Find out everything you need to know about this valuable business tool with this practical and accessible guide. The person most accredited for mounting and articulating the value chain thought is michael porter in his 1985 book, competitive advantage.
Having a company value chain analysis sets your product apart from the rest of the competition. Porter s 1985 value chain framework analyzes the value creation at the. Porters value chain analysis is a tool that can be used to determine exactly how your company goes about the task of creating value. Pdf the linkages in value chains can be finely tuned to gain a competitive edge. This chain is made up of 9 steps and the process can be changed in any of the nine steps to add further value to the final product. This value chain analysis diagram example illustrates value chain analysis. Competitive advantages differences among competitor value chains are a key source of competitive advantage porter, 1985 firm infrastructure used to increase. The value chain analysis that has been put forward by porter is used by marketers to help them understand those particular activities that can give a competitive advantage to the organisation and also help the organisation to create value. Porters value chain what is the value chain of porter. Michael porter discussed this in his influential 1985 book competitive advantage, in which he first introduced the concept of the value chain. The idea of the value chain is based on the process view of organisations, the idea of seeing a manufacturing or service organisation as a system, made up of subsystems each with inputs. Everything you need to know about value chain analysis. The concept was created around 1985 by michael porter, harvard business school professor. Value chain analysis overcomes a number of important weaknesses of traditional sectoral analysis.
Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits. The value net identifies four types of players that every company faces and could directly influence your company. As you might have guessed, the value chain is a set of activities that will lead to the creation of value. You should be familiar with the original model see figure 1 and the activities described within it. Value chain analysis of procter and gamble case study. Value chain analysis value chain competitive advantage. Understand michael porter s value chain in no time. Michael porter defines value chain as a representation of a firms value.
The value chain from competitive advantage, by michael. Porters value chain analysis starbucks by yuta lolap on. Coca cola value chain analysis researchmethodology. Value chain refers to the functional activities of a business that add value to its customers. Porters value chain analysis free management books. A value chain is a series of activities or processes that aims at creating and adding value to an article at every step during the production process. Value added selling price less the cost of purchased raw materials has sometimes been used as the focal point for cost analysis. Porter 1 suggests that value chain analysis can be a. Value added selling price less the cost of purchased raw materials has sometimes been used as the focal point for cost analysis because it was viewed as the area in which a firm can control costs. The porter s value chain concept says that there is a chain of events which occur in a company right from the procurement of raw materials to the delivery of goods as well as the post sales service.
Review on csr issues based on value chain model and its. Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firms cost of creating it. An overview of porter s value chain in various business. Subsector analysis value chain analysis subsector and value chain analysis action for enterprise. The value chain the term value chain was used by michael porter in his book competitive adva n tage. Creating and sustaining superior performance porter 1985. Research directions concerning the csr issue or organizational ethical problem from the perspective of value chain or global value chain. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. A handbook for value chain research prepared for the idrc by. Although the initial work by porter stimulated early interest in value chains, feller et al 2004 identify a number of significant trends that require analysis from a value chain. A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. T he value chain analysis describes the activ ities the organ ization performs and links them to the organizations competitive pos ition.
Customers, suppliers, competitors and complementors. The value chain from competitive advantage, by michael porter. Value is what buyers are willing to pay, and superior value stems. Porter suggested that activities within an organisation add value to the service and products that the organisation produces, and all these activities should be run at optimum level if the organisation is to gain any real competitive. Value chain for a copier manufacturer adapted from porter, 1985 cpp insight although the value chain. Porter suggested that activities within an organisation add value. Ikea valuechain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the global furniture retailer. For example the following is an example of the value chain for copier manufacturer. Valuechain analysis as a tool of strategic accounting. Each of these types of players offer opportunities for cooperation with your company, even the competitors.
The value chain also known as porters value chain analysis is a business management concept that was developed by michael porter. Value chain analysis is the method for determining the critical path to enhance customer value while reducing costs. The figure below illustrates the essence of value chain analysis. Porter s value chain is a model that is sometimes included in a marketing principles textbook, but is more commonly found in a book. Michael porter outlined the value chain model in his book competitive advantage. In his book competitive advantage 1985, michael porter explains value chain analysis. The answer is frequently given by a value chain analysis.
1171 1501 939 304 1498 1410 1000 1417 653 822 1103 1394 1449 630 1534 229 1519 216 1500 216 926 1529 246 869 1139 107 388 1207 1154 677 319 795 579 934 1473 780