The document defines a value chain as the series of activities that create and build value at each step, from raw materials to the final product sold to customers. It was conceived by Michael Porter in 1985. A value chain consists of nine activities - five primary activities related to direct production and delivery, and four support activities. The primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. The support activities are procurement, human resources, technological development, and infrastructure. To be successful, a firm needs to seek competitive advantages throughout its entire value chain and those of its suppliers, distributors, and customers.

1. DEPARTMENT OF
MANAGEMENT SCIENCES
BBA IV A
AWKUM

3. Definition:
“A value chain is the whole series of activities that
create and build value at every step.”
OR
“A high-level model of how businesses receive raw
materials as input, add value to the raw materials
through various processes, and sell finished
products to customers.”
CONCEPT BY:
Michael Porter in his 1985 book
'Competitive Advantage'.

4. What is the value chain made of?
• 5 PRIMARY ACTIVITIES
&
• 4 SECONDARY / SUPPORT ACTIVITIES.

5. PORTER’S VALUE CHAIN:

6. PRIMARY ACTIVITIES:
1. INBOUND LOGISTICS: Involve relationships with suppliers
and include all the activities required to receive, store, and
distribute inputs.
2. OPERATIONS: All the activities required to transform inputs
into outputs (products and services).
3. OUT BOUND LOGISTICS: Include all the activities required
to collect, store, and distribute the output.
4. MARKETING & SALES: Inform buyers about products and
services, induce buyers to purchase them, and facilitate their
purchase.
5. SERVICE: Includes all the activities required to keep the product
or service working effectively for the buyer after it is sold and
delivered.

7. SUPPORT ACTIVITIES:
1. PROCUREMENT: The acquisition of inputs, or
resources, for the firm.
2. HR: All activities involved in recruiting, hiring, training,
developing, compensating and (if necessary) dismissing
or laying off personnel.
3. TECHNOLOGICAL DEVELOPMENT: Equipment,
hardware, software, procedures and technical
knowledge brought to bear in the firm's
transformation of inputs into outputs.
4. INFRASTRUCTURE: covers planning , finance ,
accounting and government affairs.

8. Example: WAL MART

10. TO BE A SUCCESSFUL FIRM:
NEED TO LOOK FOR COMPETITIVE ADVANTAGES
BEYOND ITS OWN OPERATIONS INTO THE VALUE
CHAINS OF SUPPLIERS , DISTRIBUTORS &
CUSTOMES.