The basic concept of the value chain management was initiated and developed by Michael Porter in the year 1985. This phenomenon was discussed by Michal Porter in his best seller ‘Competitive advantage: Creating and Sustaining Superior performance’. Porter always stresses on the point of organizational effectiveness and he focused on the point that the value chains of organizations are embedded in a large stream of activities and he calls this phenomenon as the value system of organizations (Porter 1998). Besides certain theories of marketing Porter stressed a lot on the value system. The value chain framework of Michael Porter helps analyze specific activities of organizations through which they can create assessment of their products.
The core aspect of value chain is adding the value and it is engaged in the value-adding activities of an organization. The value chain is closely related to the production systems and certain important concepts like waste reduction, customer service, and employee empowerment are also incorporated in the value chain. There are different activities that are involved in the value chain management like the primary and the support activities. The primary activity for adding the value in organizational processes includes: Inbound logistics, services and maintenance, marketing and sales, outbound logistics etc. Besides the primary activities there are certain support activities which are also important for an organization and these support activities include elements like general infrastructure of the management, human resource management and procurement. In order to add the value in every activity the value drivers and cost are identified for each activity (Evans & Collier 2006).
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