Editing Value chain (section)

==Role of the business unit==
According to Porter, the appropriate level for constructing a value chain is the [[business unit]] within a business,<ref name="Michael E. Porter 1985">Michael E. Porter (1985) Competitive advantage: creating and sustaining superior performance. The Free Press</ref> not a [[division (business)|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.<ref>Porter, M., [https://books.google.com/books?id=vNldIVx6BQ4C&dq=%22an+industry-+or+sector-wide+value+chain+is+too+broad%22&pg=PA50 The Value Chain and Competitive Advantage], in Barnes, D., ed (2001), ''Understanding Business: Processes'', pg. 52, accessed 14 February 2024</ref>

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.<ref name="Michael E. Porter 1985"/>[[File:Porter_Value_Chain.png|thumb|500px|Michael Porter's value chain|center]]

===Primary activities===
All five primary activities are essential in adding value and creating a competitive advantage and they are:<ref>{{Cite journal |last=Zamora |first=Elvira A. |date=2016-08-31 |title=Value Chain Analysis: A Brief Review |url=http://koreascience.or.kr/journal/view.jsp?kj=GSHSS5&py=2016&vnc=v5n2&sp=116 |journal=Asian Journal of Innovation and Policy |language=en |volume=5 |issue=2 |pages=116–128 |doi=10.7545/ajip.2016.5.2.116 |issn=2287-1608|url-access=subscription }}</ref><ref name="Porter1996" />

*Inbound [[logistics]]: arranging the inbound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores
*[[Operations management|Operations]]: concerned with managing the process that converts inputs (in the forms of raw materials, labor, and energy) into outputs (in the form of goods and/or services).
*Outbound logistics: is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user
*[[Marketing]] and [[sales]]: selling products and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
*[[Service (business)|Service]]: includes all the activities required to keep the product working effectively for the buyer after it is sold and delivered.

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.<ref>{{Cite web|url=https://www.investopedia.com/terms/v/valuechain.asp|title=Value Chain|last=Kenton|first=Will|website=Investopedia|access-date=2019-02-20}}</ref>

===Support activities===
{{Unreferenced section|date=June 2023}}

Using support activities helps make primary activities more effective. Increasing any of the four support activities helps at least one primary activity to work more efficiently.
*Infrastructure: consists of activities such as [[accounting]], [[Corporate law|legal]], [[finance]], [[control (management)|control]], [[public relations]], [[quality assurance]] and [[Strategic management|general (strategic) management]].
*[[Research and development|Technological development]]: pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs(Raw materials) into outputs (finished goods).
*[[Human resources management]]: consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel.
*[[Procurement]]: the acquisition of goods, services or works from an outside external source. In this field company also makes decisions of purchases.

===Virtual value chain===
The virtual value chain, created by [[John Sviokla]] and [[Jeffrey Rayport]],<ref>Rayport, J. F., & Sviokla, J. J. (2000), ''Exploiting the virtual value chain''. HBR, 1995(november-december), 75-85</ref> is a [[business model]] describing the dissemination of value-generating information services throughout an [[Extended Enterprise]]. This value chain begins with the content supplied by the provider, which is then distributed and supported by the [[information infrastructure]]; thereupon the context provider supplies actual customer interaction. It supports the ''physical value chain'' of [[procurement]], [[manufacturing]], [[Distribution (business)|distribution]] and sales of traditional companies.