Value chain analysis

An organization can create strategic advantage by managing its value chain.A value chain is a set of inter linked value creating activities performed by an organization.These activities being with inputs,go through processing and continue up to outputs marketed to customer.It is concerned with producing and delivering products to customers.
Value chain analysis is helpful in understanding how value is create or lost.The focus of value chain analysis is to examine the organization in the context of a chain value creating activities.It is internal to the organization.
Prof. Michael Porter developed the value chain concept.It identifies two types of activities for an organization.

1.Primary activities :
They are directly related to the creating or delivery of the product to the customer.They consists of five sub-activities.

• Inbound logistic :Receiving and storing raw materials;material handing,stoke control,material transport.
• Operations :Converting raw material into finished productive manufacturing,packaging,assembling,testing.
• Outbound logistics :Order processing and physical distribution;collected,store and distributed products to customers.
• Marketing and sales :Pricing,promotion and selling products to satisfy customer needs.
• Service :Installation,repairs,spare and training.They enhance or maintain value of product.

2.Support activities :They are provided to sustain the primary activities.They consists of four sub-activities.

• Procurement :Activities related to processes for purchasing inputs.
• Technology development :Activities related to acquiring new technologies and research and development for innovation.
• Human resources management :Activities related to acquisition,development,utilization and maintenance of human resources.
• Infrastructure :Activities related to infrastructure building,such as strategic planing,quality control,accounting,finance,information management,organization design.