Value chain

A value chain is a sequence of activities that an organization performs to design, produce, market, deliver, and support goods or services for customers. The concept was introduced by Michael Porter in Competitive Advantage: Creating and Sustaining Superior Performance (1985) as a framework for analyzing how firms create value and achieve competitive advantage through coordinated business processes.

Value chain analysis examines how each activity—ranging from inbound logistics and operations to marketing, sales, and after-sales service—contributes to overall cost structure and customer value. The framework also includes supporting functions such as infrastructure, human resource management, technological development, and procurement, which enable primary activities to operate effectively.

Beyond individual firms, the value-chain concept has been extended to industry, national, and global levels, where interconnected production networks—often referred to as global value chains (GVCs)—shape international trade, investment patterns, and economic development. As a result, value-chain analysis is widely used in strategic management, supply-chain management, and development economics to understand competitiveness, efficiency, and value creation across organizations and regions.

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