To analyze specific activities for gaining competitive advantage, porter formulated a strategy to use set of interrelated generic activities performed as common practice. The term 'Value Chain' was used by Michael Porter in his book "Competitive Advantage: Creating and
Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage.
Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency. There are four main areas of support activities: procurement, technology development (including R&D), human resource management, and infrastructure.
In most industries, it is rather unusual that a single company performs all activities from product design, Production of components, and final assembly to delivery to the final user by itself. ...