Value chain analysis which was developed by Michel Porter, is a technique which helps organization to access its resources and in so doing determine its strength and possible weaknesses. Value chain analysis looks at the activities that go to make up a product or services with a view to ascertain how much value each activity adds.
“Hence, the value chain analysis emphasis how managers and business professionals should try to develop a variety of strategic uses of internet and other technologies for those basic processes that add the most value to a company’s products or services and thus to the company.”
Value Activity :-
i) Inbound Logistics : These are the activities associated with the procurement, storage and flow of inputs to the product like material handling, warehousing, inventory control, vehicle scheduling and return to suppliers.
ii) Operations : Activities involved to the transformation of inputs into final products.
iii) Outbound Logistics : These include activities which are associated with collection, storage and distribution of finished goods to the customers.
iv) Marketing and Sales : Advertising, Sales promotion, sales force management, channel selection channel relation and pricing.
v) Service : These are the activities aimed at providing services to enhance or maintain the value of the product like installation, repair, training, supply of parts and product adjustment.
i) Procurement : It includes purchase of material and service input, equipment and machinery etc.
ii) Technology Development : Technology involved in product designing and manufacturing processes requires activities to be performed and perfection and up gradation.
iii) Human Resources Management : Management of human resource- training, development, recruitment of manpower – is involved in each an every activity in value chain.
iv) Firm Infrastructure : These are the activities which considered as a whole to provide a infrastructure to the firm. They relate to general management, accounting and finance, legal affairs, strategic planning etc.