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Hub AI
Value chain AI simulator
(@Value chain_simulator)
Hub AI
Value chain AI simulator
(@Value chain_simulator)
Value chain
A value chain is a progression of activities that a business or firm performs in order to deliver goods and services of value to an end customer. The concept comes from the field of business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.
The idea of [Porter's Value Chain] is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
— Institute for Manufacturing (IfM), Cambridge.
According to the OECD Secretary-General (Gurría 2012), the emergence of global value chains (GVCs) in the late 1990s provided a catalyst for accelerated change in the landscape of international investment and trade, with major, far-reaching consequences on governments as well as enterprises (Gurría 2012).
According to Porter, the appropriate level for constructing a value chain is the business unit within a business, not a business division or the company as a whole. Porter is concerned that analysis at the higher company levels may hide certain sources of competitive advantage only visible at the business unit level.
Products pass through a chain of activities in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities.
All five primary activities are essential in adding value and creating a competitive advantage and they are:
Companies can harness a competitive advantage at any one of the five activities in the value chain. For example, by creating outbound logistics that are highly efficient or by reducing a company's shipping costs, it allows to either realize more profits or pass the savings to the consumer by way of lower prices.
Value chain
A value chain is a progression of activities that a business or firm performs in order to deliver goods and services of value to an end customer. The concept comes from the field of business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.
The idea of [Porter's Value Chain] is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
— Institute for Manufacturing (IfM), Cambridge.
According to the OECD Secretary-General (Gurría 2012), the emergence of global value chains (GVCs) in the late 1990s provided a catalyst for accelerated change in the landscape of international investment and trade, with major, far-reaching consequences on governments as well as enterprises (Gurría 2012).
According to Porter, the appropriate level for constructing a value chain is the business unit within a business, not a business division or the company as a whole. Porter is concerned that analysis at the higher company levels may hide certain sources of competitive advantage only visible at the business unit level.
Products pass through a chain of activities in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities.
All five primary activities are essential in adding value and creating a competitive advantage and they are:
Companies can harness a competitive advantage at any one of the five activities in the value chain. For example, by creating outbound logistics that are highly efficient or by reducing a company's shipping costs, it allows to either realize more profits or pass the savings to the consumer by way of lower prices.