The concept of the value chain
Posted: Sun Dec 22, 2024 6:20 am
The value chain is a business model that describes the entire range of activities involved in producing a company's product. Some sources also call it the "value chain" or "added value chain". For a company that produces certain products, the VSC will contain a description of all production stages, from concept creation, raw material procurement, marketing, and up to the distribution stage.
Harvard Business School professor Michael E. Porter usa phone list presented a conceptual description of the value chain in business in his work "Competitive Advantage: Creating and Sustaining High Performance". According to the scientist, it is impossible to understand the competitive advantage of a company by looking at its entirety, since it is provided by numerous separate areas of activity at the stages of development, creation, promotion, delivery and service of the product.
Therefore, it is necessary to ensure maximum value at every individual stage of business processes.
In the conditions of high competition for providing the end customer with the most favorable price, enterprises need to organize constant monitoring of the value created. Only in this case can they not lose their advantages in the long term.
Michael Porter's value chain is an effective tool that a company can use to identify inefficiencies in its own business. Then, based on this information, it can develop strategies to optimize production processes for maximum efficiency and profitability.
In addition, to ensure that the company's value creation activities are smooth and effective, it is necessary to ensure that consumers develop a sense of security and confidence at a level that will make them loyal. A CSP analysis can help with this.
Value Proposition
Source: shutterstock.com
The most important function of the value chain is to help a business give its customers exactly what they expect (customer satisfaction).
According to the CSC, a company creates a product and delivers it to customers along the chain. Value should not be understood as the product or service itself, but as the amount (price) that the consumer is willing to pay. Michael Porter's value chain concept was used by large corporations in marketing campaigns. They focused their advertising not on their products, but on satisfying consumer needs. For example, the holiday mood from Coca-Cola. Here it is important to remember the need to fulfill your promises. Otherwise, the effect will be completely opposite.
Harvard Business School professor Michael E. Porter usa phone list presented a conceptual description of the value chain in business in his work "Competitive Advantage: Creating and Sustaining High Performance". According to the scientist, it is impossible to understand the competitive advantage of a company by looking at its entirety, since it is provided by numerous separate areas of activity at the stages of development, creation, promotion, delivery and service of the product.
Therefore, it is necessary to ensure maximum value at every individual stage of business processes.
In the conditions of high competition for providing the end customer with the most favorable price, enterprises need to organize constant monitoring of the value created. Only in this case can they not lose their advantages in the long term.
Michael Porter's value chain is an effective tool that a company can use to identify inefficiencies in its own business. Then, based on this information, it can develop strategies to optimize production processes for maximum efficiency and profitability.
In addition, to ensure that the company's value creation activities are smooth and effective, it is necessary to ensure that consumers develop a sense of security and confidence at a level that will make them loyal. A CSP analysis can help with this.
Value Proposition
Source: shutterstock.com
The most important function of the value chain is to help a business give its customers exactly what they expect (customer satisfaction).
According to the CSC, a company creates a product and delivers it to customers along the chain. Value should not be understood as the product or service itself, but as the amount (price) that the consumer is willing to pay. Michael Porter's value chain concept was used by large corporations in marketing campaigns. They focused their advertising not on their products, but on satisfying consumer needs. For example, the holiday mood from Coca-Cola. Here it is important to remember the need to fulfill your promises. Otherwise, the effect will be completely opposite.