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. ...Show more