Outline of Value Chain Analysis
Rex C. Mitchell, Ph.D.

* The value chain is a linked set of value-creating activities from raw materials through final goods in the hands of the ultimate consumer (see H&W section 4.2)

* Vertical integration is a measure of how much of the value chain is done by a given firm (also as a verb to refer to changes)

* There are two (complementary) main ways of subdividing a firm to perform internal analysis & evaluate a firm's strengths and weaknesses:

* The value chain breaks a firm into its strategically important activities to:

* Corporate value-chain analysis for each product/business line:

  1. Identify major activities
  2. Assess strengths and weaknesses; how each contributes to competitive advantage and is it sustainable?
  3. Determine linkages within each value chain; look for opportunities to improve
  4. Evaluate potential synergies among various value chains (of various business lines, also outside with supplier and channel value chains)


In either value chain or functional area analysis:

Diagnosis using either value chain analysis or functional area analysis is very similar; these differ primarily in the way of subdividing the organization (in each case, to make the analysis more practical):

Value Chain Subdivision . Functional Area Subdivision
Primary Activities:
.Inbound logistics
.Outbound logistics
.Marketing & salesMarketing
Support Activities:
.Human resource mgtOrganizational

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Last modified July 25, 2009 Copyright 1999-2009 Rex Mitchell