A value chain is a business model that describes the full range of activities needed to create a product or service. For businesses or companies that produce goods, a value chain comprises the steps that involve bringing a product from conception to distribution, and everything in between—such as procuring raw materials, manufacturing functions, and marketing activities.
For any business working towards scaling and realizing high returns, conducting a value chain analysis is important. Business / companies conduct value chain analysis by scrutinizing every production step required to create a product, with the ultimate goal of delivering maximum value for the least possible total cost. There are many advantages of value chain analysis, all of which result in a company’s ability to understand and optimize the activities that lead to its competitive advantage and higher profit levels.
Businesses don’t compete with businesses. Value chains compete with value chains. — Vusi Thembekwayo
Do you understand the value chain of your business?
