This exemplifies the concept of value chain.
The concept of value chain was introduced and popularized by Michael Porter in his bestseller, Competitive Advantage: Creating and Sustaining Superior Performance (Value Chain 2005). In this book which was published in 1985, he clearly describes what value chain is. He has identified a set of interrelated activities common to a wide range of firms.
Value chain is "a high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers (What is value chain 2005)." This is possible, since Michael Porter, as stated above, has already devised a way to classify the activities of a firm in its operation. Value chain therefore, categorizes the "value-adding activities of an organization (Value Chain 2005)."
Michael Porter classified business activities as either primary or support activities. Primary activities include: inbound logistics, production, outbound logistics, sales and marketing, maintenance. Meanwhile administrative infrastructure management, human resources management, R&D, and procurement comprise the support activities. ...
Primary activities involves those activitieswhich starts as the procurement of raw materials from suppliers to bringing them to customer. Inbound logistics involve the "receiving, warehousing, and inventory control" of the company's input. Meanwhile, operations comprise the value adding activities which transforms the raw materials into the final output. Outbound logistics are the activities which are necessary to bring the finished product to customers like storage, order fulfilment, warehousing, etc. Marketing and sales are the company's effort to attract buyers to purchase the products (The Value Chain 2004). Maintenance and ehancement of products' value through customer support and repair services. All these activities in the value chain are designed to add value that the customer derived from the company's products or services.
Figure 1. Primary Activities of the Value Chain
The main goal of support activities is to facilitate the primary activities. Procurement is essentially the purchasing of raw materials and other inputs utilized in value adding activities. On the other hand, technology and development, process automation and other technologies which are used to simplify and aid in the company's production. Human resource management involves the process of recruitment, development, motivation, and compensation of employees working for the business. Firm infrastructure is comprised of activities such as finance, legal quality, management, etc (The Value Chain 2004).
This paper will look at the value chain of Dell Incorporated. It will focus on the trends currently happening in the global market and how these changes may influence the value chain of the business entity.
Dell Incorporated and its