Michael E. Porter's Value Chain model analysis the flow of value-adding activities in firms

The value chain was introduced by Michael E. Porter in 1985 in the book “Competitive Advantage". "Value chain" is used to analyze the flow of value-adding activities from the raw material supplier to the end customer.
The model consists of 9 fields. These are Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service, Procurement, Technology Development, Human Resource Management and Firm Infrastructure.
The model looks at what value each link adds the company and thereby uncovers the company's competitiveness.
Section
0:00 Introduction of the author and the purpose of the model
0:31 The nine activities and margin also called profit
1:23 The nine activities divided into two categories
1:59 The five primary activities in the bottom of the model
3:52 The four support activities in the upper part of the model
7:09 Use of the model
8:03 A review of an example - baldes for windmills
11:43 Criticism of the model
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Clear and concise - a very good tutorial.

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Wish Porter was never existed! He is the nightmare of every Management, Finance and Accounting student!

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short, clear and visible, a very good explanation of the model. thank you

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God bless you and your family. This video will help me in my exam tomorrow. Thank you!

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Keep up

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Fantastic explanation for value chain analysis! Cheers

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I have a presentation about this topic tomorrow, great video!

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Fantastic explanation. I have an exam tomorrow. Used this to understand.

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This was very informative. Thank you so much!

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very well explained. i have understood fully. bravo

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[@limnadavis6885]

Thank you sir.. this vdo helped me a lot by understanding the basic of value chain .. bz u well explained

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Well explained and good examples

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This is well explained, thank you. It's help me a lot for uni exam

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very helpful. Thanks a lot!

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Perfectly on point, great video

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Good one, thanks for this :)

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Well explained, nice video.

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[@kartikjoglekar5420]

The narrators voice is stragely calming

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Well explain sir,thank you a lot

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i just wanna say thank you so much! nothing more

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Well explained thank you sir

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Finally I got it at a very beginning of the video.

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[@pratipbhattacharyya6653]

great explanation . really appreciate

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[@mukhriddinkudratov2874]

precisely information is given one by one thank you got some notes

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Simple and repetitive so it sticks. Thank you

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[@catherineminayochegero5661]

thanks so much well explained.

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very helpful for my exam thank you!!

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Well explained thanks a lot

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Best tutorial ♥️

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very helpful, thank you

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Thank you👏🏾👏🏾

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[@facebook1492]

thanks alot very clear

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[@HonestFranklin]

Since the company can carry out production activities, it can also purchase and manage accounting. Therefore, the composition of a company's business portfolio is very important.

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[@felistusmboko5525]

Well elaborated

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[@EOCmodernRS]

The model does not take into consideration that one point could cost more for you to make than what the customers are willing to pay, yet it is essential for the Whole of the Product.

[@flixabout]

Thank you for your response. That's a good discussion. Should you keep the entire production in-house or outsource certain parts. We then have to consider quality, delivery terms etc. See, among other things, Krajlic's model on this channel. Thanks again for your interest.

[@emmavink]

Unless you cut labour costs, outsource cheap, unskilled labour/raw materials from developing countries...there is always exploitation, especially the higher you go in any value chain.

[@enkhbate]

thank you

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[@gwynethchanda7071]

Well explained and very clear

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[@antoniosampaio8119]

Very good, congrats for good explanation.

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[@maisallataifeh654]

Is it possible to create a value chain for Airport E-gates? And if so, What exactly can I write in them? God bless you, well explained.

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Thanks for your kind feedback. Usually, you can use the Value Chain for all businesses. But we do not know enough about Airport E-gates to help you with this specific task. Hope others can. Good luck with the task.

[@ntcuong01ct1]

Dear Friends, I have a question: In the Value Chain Ananlysis, could you talk how the support activities create company margin?. Give me some examples. Thank you.

[@flixabout]

Interesting question. It will, of course, be different for each organization. But here are a couple of examples: Purchasing procedures can ensure that production never runs out of products to be used in production. The products are ordered in time. Technology development: The automatization of the warehouse system. Easier to find the product for production and for the customers. This makes faster production and delivery = better margin HR: This department help hiring the skills that make the operation run smooth The management ensures that the cooperation between all departments works well. Thank you for your interest. We hope you subscribe and tell others about our channel.

[@brvmhisscall7203]

Please what do you mean by procurement performs the function of purchasing but not the physical input.. I am not clear with the statement not the physical input can you elaborate me on that please. Thank you.

[@flixabout]

@Brv MhissCall. Procurement performs the function of purchasing but not the physical input. This is normally a white color function. They negotiate with suppliers about delivery terms. They decide about if orders of goods are just in time or stock. They make all the paper work but the physical delivery of the goods are part of inbound logistics. Hope this little elaboration helps. Please subscribe to our channel and tell others about us.

[@valentinemokua]

Hello...I have a question... why did michael porters Classify Procurement as a support activity and not a primary activit

[@flixabout]

It is the administration of procurement not the product itself that is located here. It could be obtaining offers, archiving papers, contacting customs authorities, etc. Hope this answers your question.

[@caliphmohamed7896]

Thanks

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[@salaminampeke653]

How do I incorporate this model in the healthcare environment? Will the components be that same?

[@flixabout]

Here is a suggestion on how a hospital fits in. The proposal does not take into account the different ways in which different countries build up their healthcare sector. Always remember to ask your supervisor if this is how it should be understood in your syllabus. If you see the field operations in the model as taking care of patients health. The field logistics in is then ambulances and suppliers of different equipment and medicine. The field outbound logistics is the recovery of the patients after operation and making a plan for the patient to return home. The field Marketing and sales - is it a private or public hospital? Private they make advertisment to the market (B2C). If it is a public hospital, then they try to profile themselves in relation to the decision-makers. In the field service the patients are given the opportunity to get aftercare of their health problems. Remember to ask your supervisor.

[@mohammedtayem3188]

Good video

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[@IsharaAbeyratne]

thanks

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[@MrKZee]

oh this voice... even if the explanation were rubbish, the voice would still make it good...

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[@ChikaNeca]

i was just thinking the opposite, that voice is fucking borin, or its just management, management is fucking boring

[@najibarahman3200]

How can I analyze the annual report of any marketing of product and explain it using porter's value chain?

[@flixabout]

That's a good question. It needs to be a very detailed annual report that shows every step in the chain. I personally have not seen any annual report with that information. Usually, you need to get hold of internal data. Are they good at procurement - buying cheap or are they good at producing the products effectively - or do they have an efficient sales team? Some times you can find the margin - the last field in the model. Do they earn money on what they are doing? Hope you can use the answer.

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@@flixabout thank you for helping me

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[@thesportsguy10]

1,000th like!! :) Good video!

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[@thesportsguy10]

@@flixabout While I have your attention, Question for you... In a real world application of this, if a company is applying this model to their own business, I take it company financials should be incorporated into this analysis to quantify the analysis? From a student POV who is applying this to a college assignment on strategic management, is it just to be used as a guide to visualising and analysing all the internal linkages?

[@flixabout]

@@thesportsguy10 There is an economy in the model. It is the tenth field - profit - explanation starts at 0:40. Does the company have profits? Can the company sell goods at a higher price than it costs to manufacture them? However, the model does not say in which of the five bottom fields; the company earns the profit. Or which of the four fields at the top performs actions that enable profit. So you're right. The model shows the internal linkages in the company. A separate financial analysis is needed to clarify in which field the profit is earned.

[@ma.veronicajusayan5487]

how to do a scattergram and histogram

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I do not know. Try to google it.

[@Proteinball]

Why does he sound like David Attenborough?

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@Lillian N David Attenborough! Thank you - we have never considered that, but we take your comment as a compliment.

[@kundankumar-fi3zj]

,👍😍

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[@wesleytrumbauer6868]

I'm pretty sure you mean Micheal E. Porter, not Micheal S. Porter. You really sent me on a wild goose chase for a guy that doesn't exist....

[@flixabout]

Yes - sorry - it is Michael E. Porter. Thanks for the feedback. We will change that at the next review of the film .

[@wesleytrumbauer6868]

@@flixabout Thanks! I'm writing a paper and had a bit of an existential crisis when I saw the S. Ended up searching to see if he had a twin or something haha

[@wesleytrumbauer6868]

Great breakdown though

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Thanks!

[@edemirdoguhan3925]

Hi people from Saxion..

[@edemirdoguhan3925]

MAGIC

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Hope you get answers from people from Saxion

[@edemirdoguhan3925]

@@flixabout Thx lol

[@edemirdoguhan3925]

Make the speed 1.25

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Thank you for your interest. Yes, we also recommend using 1.25 or 1.5 when listening to our movies. If you want to listen to the speech, read the text of the model itself and the subtitles at the same time, then it is best to stay at normal speed. Thanks again for your interest. We hope you subscribe and tell others about our channel.

[@apexoutdoor]

Bus 890 Was Here !! Like if you're from that class

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Hope you met the others from your class somewhere else

[@alienufo3293]

BSAB ASAN KAYO comment nga kayo HAHAHAHA

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@Alien UFO - Sorry - I do not understand this comment.

[@anonomyss]

Had to speed this up 2x. Way too fucking slow holy crap.

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We recommend people to choose speed 1.25 or 1.5 if it's too slow. All our videos are recorded at the same speed so you have the choice.

[@akanicolerocks711]

This is so boring and dry

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@akanicolerocks711. Thanks for your feedback. We try to provide knowledge about various theoretical models on our KZbin page. We have decided that we will not attempt to be funny. We prefer to be as correct as possible in our presentation of the models and thus risk it being perceived as boring and dry. A funny attitude can be misunderstood in a learning situation especially when people from different cultures use our channel. We hope you understand our priorities.