Strategic Marketing: Planning and Control, Third Edition

(Wang) #1

The concept of a value chain, developed by Porter (1980), categorises the
organisation as a series of processes generating value for customers and
other stakeholders. By examining each value creating activity, it is pos-
sible to identify sources of potential cost leadership and differentiation.
The value chain (Figure 8.7) splits activities into: (i) primary activities: in-
bound logistics, operations, outward logistics, marketing/sales and service
and (ii) secondary activities: infrastructure, human resource management,


Strategy formulation 159

Cumulative
experience

Unit cost

Volume

Figure 8.6
Experience curve

Secondary activities

Margin
of
value

Firm′s infrastructure
Technology development
Human resource management
Procurement

In-bound
logistics Operations

Out-bound
logistics

Primary activities

Marketing
and sales Service

Figure 8.7
The value chain (Source: Porter, 1985)

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