Porters Value Chain By Katie & Katie

Primary Activities Activities concerned with receiving storing and distributing inputs to the product or service Activities that enhance or maintain the value of the product/ service Providing awareness of the product or service enabling consumers to purchase. Transforms theses inputs into the final product/ service Collect store and distribute the product or service to the customer

Transcends all primary activities and is associated with all employees 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 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 the model

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 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.