The Value Chain
- Topics:
- Strategy Formulation
- Tags:
- Activity,
- Channel Management,
- Marketing,
- Value Chain
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Overview: To better understand the activities, through which a firm develops a competitive advantage and creates shareholder value, it is useful to separate the business system into a series of value-generating activities referred to as value chain. Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified primary and support activities. The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin. The firm's margin or profit then depends on its effectiveness in performing these activities efficiently. It is in these activities that a firm has the opportunity to generate superior value. A competitive advantage may be achieved by reconfiguring the value chain to provide lower cost or better differentiation.
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Format: HTML | Date: Jan 2003 | Pages: 1
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