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

Providing awareness of the product or service enabling consumers to purchase.

Activities that enhance or maintain the value of the product/ service

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

Transcends all primary activities and is associated with all employees

Acquiring of various resource inputs to the primary activities

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• 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

Limitations of themodel

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.