Operations
Value chain
Last reviewedWhat is Value chain?
A firm's activities split into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, human resources, technology development, procurement).
When should you use Value chain?
To find where a cost or a problem sits, where the company creates value, and where an advantage comes from, especially in cost and operations cases.
What are its limits?
It can miss demand-side issues such as brand fit or willingness to pay, and it describes one firm. The wider chain across companies is the industry value chain.
How do you tailor it to a case?
Walk it stage by stage for this business, size the cost at each stage, and stop at the stage where the problem clearly lives.
Where does it come from?
Michael E. Porter, Competitive Advantage (1985).
Use a framework as a source of ideas, then put a structure built for this specific problem on the table. Reciting a framework by name is a common way to lose marks.