The Concept described by Michael Porter that describes how firm regulates and function is known as value chain. Value chain is the set of activities that describes the activities of firm or business that is operating in any industry. In order to construct value chain, business unit is an essential area. Along with this, corporate level or the divisional level are not that much important in constructing the value chain. Every product pass through each and every activity of the chain in a specified manner or order and thus at every step or activity that particular product attains some value. Therefore, the entire chain of activities gives the product more additional and added value as compared to the sum of all the added values of all activities. It is very much important not to mix the core concept of the value chain along with the costs that occurs during the conceptualization of the activities.

Every step that is included in the value chain of any product is important and thus it adds value in the output of that particular product. If from the scratch, product is implemented by using specific set of techniques, value will be added and in the end that particular product will come up with latest and best potential outcomes.

Value chain is thus known as a powerful as well as an important tool in analyzing the strategic planning. It helps in analyzing and predicting the future of any product. Management actually use this value chain framework in order to analyze and rectify the outcomes of any product and thus it plays a key role in making any product effective as well as efficient. This value chain framework can now be applied to whole supply chain networking in order to be at the best and to generate effective outcomes too. Thus many firms use this framework in order to generate effective outcomes.


Umit S. Bititci, Allan Carrie (1998), “Strategic management of the manufacturing value chain: proceedings of the International Conference of the Manufacturing Value-Chain, August 98, Troon, Scotland, UK”, Springer, pg 652

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