Strategic Marketing: Planning and Control, Third Edition

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)