ACCA SBL Syllabus C. Strategy - Value Chain - Notes ^{4 / 8}

Competitive advantage or the competitiveness of an organisation can be achieved by the way in which it organises and performs its activities.

Value activities are the activities by which an organisation creates value in its products.

A Value chain describes the activities of the organisation that add value to purchased inputs.

Primary activities are those involved in the production of goods or service. Support services supply assistance.

The linkages are the relationships between activities. Managing the value chain, which includes relationships with suppliers, can be a source of strategic advantage over competitors in the industry.

The best way to demonstrate this process is through the example of a restaurant.

• A restaurant has to buy food, cook it and then serve it to customers.

• Customers purchase value. 

  A customer compares your product with similar competitors.

• The business creates value by ensuring their product (food, effective service etc) is either more efficient or that they are providing a unique product or service.

Porter developed his value chain to determine whether and how a firm's activities contribute towards its competitive advantage.