Value chain analysis is an approach to assessing the positions of competitive advantage. A value chain first classifies the activities of a business into the discrete steps performed to design, produce, market, deliver, and service a product.
Supporting these specific value-creation activities are firm-wide activities such as procurement, human resource management, technology, and the infrastructure of systems and management that ties the value chain together.
To gain advantage a business must either perform enough of these activities at a lower cost to gain an overall cost edge while offering a parity product, or perform them in a way that leads to differentiation and a premium price.
- ^ American Marketing Association, AMA Dictionary.