Porters Value
Chain
By Katie & Katie
Activities
concerned with
receiving storing
and distributing
inputs to the
product or
service
Transforms
theses inputs
into the final
product/
service
Collect store and
distribute the product
or service to the
customer
Activities that
enhance or
maintain the
value of the
product/ service
Providing
awareness of the
product or
service enabling
consumers to
purchase.
Transcends all
primary activities
and is associated
with all employees
Acquiring of
various
resource
inputs to the
primary
activities
Formal Systems involved with
the structure of an organisation;
Planning, finance quality control
and information management.
Associated with
all value added
activities can be
connected directly
with a product or
processes such as
MIS
What is the value added
chain?
• The value that's created and captured by a
company is the profit margin:
• Value Created and Captured – Cost of Creating
that Value = Margin
Example of Porters Value Chain
applied to an organisation
•
•
•
•
•
•
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•
Amazon
Inbound logistics – receiving stock
Outbound logistics – store and distribute stock
Marketing – personalising of customer experiencing e.g.
recommendations and TV advertising etc.
Services – Amazon prime is a new addition enhancing the
existing experience.
Procurement – replenishes stock with a variety of suppliers
Technology – Personalise recommendations and one click
ordering are Amazon initiatives
Human Resources – Great training for employees
Infrastructure – Use of most up to date systems and
technology
It has to be adapted to a particular business
situation and that can be a disadvantage since, to
get the best from the value chain, it’s not “plug and
play”.
It is more suited to a manufacturing
environment and can be difficult to apply to a
service provider
The scale and scope of a value chain
analysis can be intimidating. It can take a
lot of work to finish a full value chain
analysis for your company and for your
main competitors so that you can identify
and understand the key differences and
strategy drivers.
Sometimes a companies overall strategy and
vision is lost when its operations are broken
down into segments.