What is Value Chain/meaning/concept
If we think of a chain, we can see that all its parts are intertwined. If we extrapolate this idea to the business world, each activity carried out corresponds to a chain. There are several chains in a company: in production , in the designer, in accounting, in distribution, in sales, etc. Each one of them plays a role and all of them together are directed towards the company’s efficiency and profitability . Value Chain
As we move along a company’s chain of activities, the value of the product to the consumer increases. Hence the name value chain. In a nutshell, a value chain means that the greater the number of activities carried out, the greater the value of the final product.
The set of activities developed to sell a product or provide a service can be divided into two types: primary or line activities and support or support activities.
The first are those that are directly related to the production and marketing of a product or service. In this section we can include internal logistics, which refers to the reception and storage of raw materials needed to produce a product.
On the other hand, raw materials must be processed to transform them into a final product. Another aspect of the chain would be marketing and sales, two strategies that promote a product. Finally, product warranties, repairs and maintenance are included in the service section.
In relation to support or support activities, they are not directly related to production and marketing, but are essential to ensure the proper functioning of a company. The most prominent are: the infrastructure of the organization section, accounting, finance , the management of resources human, the development of technology and the item of innovation . Value Chain
The usefulness of the value chain
After seeing all parts of a chain, it is possible to analyze a company’s value chain. For this, you must research all parts to try to correct possible failures. One of the objectives of this type of analysis may be to reduce costs, but it is important that the cuts are carried out in the most appropriate part of the chain. In an analysis of the value chain, we can conclude that outsourcing is advisable, that is, the outsourcing of certain activities by other companies.