What is value chain analysis

Value chain (according to Porter)

If you want to analyze a company, the question arises again and again of which areas it should be divided into in order to take a closer look at the individual components. Michael Porter's value chain is arguably the most widely used representation of a company's activities and can easily be adapted to a specific case.

 

The analysis and representation of the value chain gives a good overview of the activities of a company. Based on this, further analyzes can be carried out, for example benchmarking different companies at the level of the individual value creation stages or in / outsourcing analyzes. The value chain should also make clear the value that the company creates through all of its activities. This can be compared to the costs incurred at each individual value chain.

The value chain model is an extension of the business system model. The activities of a company are divided into primary and supporting activities. The primary activities map the chain from product manufacture through sales to customer service: Inbound logistics, production / operations, marketing and sales, outbound logistics, service. The supporting activities do not directly contribute to production or sales, but are necessary for the primary activities to be carried out: infrastructure development, human resource management, technology development, procurement. The aim of all activities is the creation of value, represented as "profit".

The individual activities can be further subdivided depending on their relevance for the company and the purpose of the analysis. Production / operations could be divided into pre-product manufacture and final assembly, for example, while marketing and sales into advertising, sales promotion, field service and sales administration. Service could be broken down into customer care, application advice, maintenance and repair, and technology development into basic research, application research and development.

A stronger systematisation of this subdivision is possible if one differentiates between direct, indirect and quality assurance activities. Direct activities directly serve to create value for the customer (e.g. product design, final assembly, field service). Indirect activities enable the direct activities (e.g. maintenance, sales management) to be carried out continuously. Finally, quality assurance activities guarantee the corresponding initial quality for the follow-up activities (e.g. monitoring, final inspection).

Publication: Internet support along Porter's value chain

The thesis provides a good overview of offers on the Internet that the company can use meaningfully to support the stages of the value chain. It should be noted, however, that the latest developments cannot yet be the subject of this work, as it was published in 1999.

Crank, K .; Teuteberg, F .; Szulim, D .: Internet support along Porter's value chain - concepts, application examples, evaluations; in: Meinhardt, S .; Hildebrand, K. (Eds.): Supply Chain Management; HMD - Praxis der Wirtschaftsinformatik, 36 (1999) 207, pp 79-94.

Publication: Study on Value Chain of Telecom VAS under Transformation Background

The publication offers an application example, which makes it clear what the individual levels of the value chain are.

PPT download value chain according to Porter

Author: Achim Sztuka

Tan, Y .; Zeng, J. 2009. Study on Value Chain of Telecom VAS under Transformation Background