Porter’s Value Chain Framework

Flashcards summarizing key concepts from Porter's Value Chain framework, focusing on primary and support activities, definitions, and distinctions between framework and model.

Porter's Value Chain

A framework to understand firm-level value creation and capture introduced by Michael E. Porter.

Primary Activities

The five primary activities identified by Porter that directly contribute to creating and capturing value.

Inbound Logistics

Activities related to receiving, storing, and distributing inputs, such as material handling and warehousing.

Operations

The process of transforming inputs into final products, involving machining, packaging, and testing.

Outbound Logistics

Activities that distribute final products to customers, including transportation and order fulfillment.

Marketing and Sales

Activities that inform buyers about products and facilitate the purchasing process, including advertising and promotions.

Service

Activities aimed at maintaining or enhancing a product's value after purchase, such as installation and repair.

Support Activities

Activities that support primary activities; these include Firm Infrastructure, Human Resource Management, Technology Development, and Procurement.

Firm Infrastructure

Activities that support the entire value chain, including management, finance, accounting, and strategy.

Human Resource Management

Activities involving the recruitment, training, and compensation of employees.

Technology Development

Activities that enhance products and processes, including research and product design.

Procurement

Activities related to acquiring resources for the firm, effectively reducing costs.

Framework vs. Model

A framework is a conceptual mechanism for guiding thoughts on a problem, while a model is a simplified representation of reality.

Value Creation

The process of enhancing the value of a product or service for the firm and its customers.

Value Capture

The ability of a firm to retain a portion of the value created for its products or services as profit.