What Does the Porter Value Chain Model Describe?

Porter's value chain model describes all the processes that a company goes through to perform a value creation process. Primary and secondary (supporting) factors are considered. The primary factors have a direct influence on the added value, while secondary factors are elementarily important for the company, but cannot be assigned directly to the added value process.

Let's first look at the primary factors: The value-added process begins with the procurement, i.e. the incoming logistics of goods. These are now transformed in the production process. The resulting product is now stored in outbound logistics and transported to the customer later. Logistics therefore refers to all processes involved in the transport and storage of goods. This is followed by the sales process, where the focus is on marketing and sales activities. Last but not least, the value of a product is also determined in After Sales Service, i.e. customer contact after sales.

In addition to these primary activities, secondary support activities such as technology, procurement, human resources and corporate infrastructure also play an important role.

The value chain can be used for a variety of purposes. For example, the model can assign costs directly to different stages of the value chain. In addition, this division can be used to observe unique selling points or differentiation features, which facilitates communication of the unique selling point of the company.