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The value chain was described and popularized by Michael Porter
in his 1985 best-seller: Competitive Advantage: Creating and Sustaining Superior
Performance. New York, NY The Free Press.
The value chain categorizes the generic value-adding activities of an organization.
The "primary activities" include: inbound logistics, production, outbound logistics, sales and marketing, maintenance. The
"support activities" include: administrative infrastructure management, human resources management, R&D, and procurement. The
costs and value drivers are identified for each value activity. The value chain framework quickly made its way to the forefront
of management thought as a powerful analysis tool for strategic planning. Its ultimate goal is to maximize value creation while
minimizing costs.
The concept has been extended beyond individual organizations. It can apply to whole supply chains and distribution
networks. The delivery of a mix of products and services to the end customer will mobilize different economic actors, each managing its own
value chain. The industry wide synchronized interactions of those local value chains create an extended value chain, sometimes
global in extent. Capturing the value generated along the chain is the new approach taken by many management strategists. By
exploiting the upstream and downstream information flowing along the value chain the firms may try to bypass the intermediaries
creating new business models.
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