Making the case for the added-value chain

ISSN： 1087-8572

Source： Strategy and Leadership, Vol.34, Iss.4, 2006-07, pp. : 39-46

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Abstract

Purpose ‐ Porter's value chain has been a keystone of strategic analysis. However, because of processes associated with economic globalization: outsourcing, brand marketing and "knowledge economy" phenomena, value drivers have changed dramatically over the last 20 years. The added-value chain provides an expanded mental model for practitioners and academics to develop and communicate strategies for value creation. Design/methodology/approach ‐ The expanded set of activities in the added-value chain was developed based on experience using the value chain in real world situations and analyzing leading business and strategy models that are commonly used by firms today. Findings ‐ The added-value chain incorporates new sources of value creation such as the firm's brand, reputation and "social capital" or goodwill in addition to profit margin. The Added-Value Chain also adds three primary activities. Practical implications ‐ Managers performing value-chain analysis need to take into account newly important business drivers. Originality/value ‐ Expanding the value chain ensures that no potential strategic activity is forgotten and no opportunity for enhancing value is over-looked.