24
The value chain
The big picture
According to Porter (1985), competitive advantage can only be understood by looking at the firm as a whole. Cost advantages and successful differentiation are found by considering the chain of activities a firm performs to deliver value to its customers. The value chain model divides the generic value-adding activities of an organisation into primary and secondary activities. An advantage or disadvantage can occur within any of the five primary or four secondary activities. Together, these activities constitute the value chain of any firm (Figure 24.1).
Figure 24.1 Value chain analysisSource: after Competitive ...
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