Value Chain

Value Chain is a process of adding value to a product in order to increase its worth. It is a series of activities that a business performs to transform its inputs into outputs. The activities are divided into primary activities and support activities.

Primary activities include:

• Inbound Logistics: Receiving raw materials and services
• Operations: Turning inputs into outputs
• Outbound Logistics: Distributing products to customers
• Marketing and Sales: Promoting and selling products
• Service: After-sales service

Support activities include:

• Procurement: Purchasing of materials and services
• Technology Development: Developing new processes and products
• Human Resource Management: Managing and training employees
• Infrastructure: Establishing and maintaining the organisation’s culture and infrastructure

For example, a company that manufactures cars has to go through several steps in order to produce a car. The steps include purchasing of the raw materials, production of the car, marketing and sales of the car, and after-sale services.