QS Study

Value Chain Activities

A company’s value chain identifies the primary activities that create value for the customers and the related support activities. It is a primary analytical tool for strategic cost analysis. It represents the internal activities a firm engages in when transforming inputs into outputs.

The value chain activities are:

The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin.

  1. Inbound logistics include the receiving, warehousing, and inventory control of input materials.
  2. Operations are the value-creating activities that transform the inputs into the final product.
  3. Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfillment, etc.
  4. Marketing and Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising; pricing, etc.
  5. Service activities are those that maintain and .enhance the product’s value including customer support, repair services, etc.