The figure below divides activities into primary and support activities as suggested by PorterР Р†Р вЂљРІвЂћСћs Value Chain Analysis model:

Secondary Activities Are Those Which Are Performed To Satisfy Internal Requirements.

Primary Activities Include The Activities That Are Performed To Satisfy External Demand.

Porter suggested that an organization is split into Р Р†Р вЂљР’Вprimary activitiesР Р†Р вЂљРІвЂћСћ and Р Р†Р вЂљР’Вsupport activitiesР Р†Р вЂљРІвЂћСћ. Michael Porter classified the entire value chain into nine activities that are interrelated to one another. Value chain analysis is used as a tool for identifying activities, within and around the firm and relating these activities to an assessment of competitive strength.

Thus, a value chain framework helps organizations to identify the activities that are important for competitiveness. And to do so, inputs consumed by the activity and outputs generated are studied, to decrease costs and increase differentiation. Products pass through activities of a chain in order and, at each activity, the product gains some value. Michael PorterР Р†Р вЂљРІвЂћСћs Value chain analysis is a process of dividing relevant activities of the business in primary and support activities that an organization performs to deliver something valuable, such as a product or service.

customers should return to the organization and transact freely and willingly. In other words, if they are run efficiently the value obtained should exceed the costs of running them i.e. Value chain analysis helps a company understand how it adds value to something and subsequently how it can sell its product or service for more than the cost of adding the value, thereby generating a profit margin. Value chain analysis is a way to visually analyze a companyР Р†Р вЂљРІвЂћСћs business activities to see how the company can create a competitive advantage for itself. Originated in the 1980s by Michael Porter, value chain analysis is the conceptual notion of value-added in the form of a value chain.

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