Value chain is is a range of activities which are applied in delivering a valuable product or services for the market. The activities are as such designing, production, marketing and distribution. Value chain starts with the raw materials used to make the products and consists of everything that is added to it before it is sold to consumers. The goal of value chain is to properly analyze and organized the flow of the product production to make sure the product is getting in the hands of consumers with care and quickly as possible.
According to Porter's value chain, business activities could be divided by two categories which are primary activities and support activities:
Primary activities
- Inbound Logistics: involve in receiving, storing and distributing the raw materials used in the production process.
- Operation: stage where raw products are turned into the final product.
- Outbound logistics: distribution stage of the final product to consumers.
- Marketing and sales: involves activities like advertising, promotions, sales-force organization, selecting distribution channels, pricing and managing costumer relationship of the final product to ensure it is targeted to the correct consumer group.
- Service: activities that are needed to maintain the product performance after it has been produced.This stage includes things like training, installation, maintenance, repair, warranty and after-sales services.
Support activities
- Procurement: how the raw materials for the product are obtained.
- Technology development: technology can be used across the board in the development of a product, including in research and development stage, in how new products are developed and designed and process automation.
- Human resource management: activities involve in hiring and retaining the proper employees to help design, build and market the product.
- Firm infrastructure: organization's structure and it's management, planning accounting, finance and quality-control mechanisms.
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