Frameworks
Value chain
The activities a firm performs to create and deliver value.
Facts checked against sources onWhat does Value chain mean?
The value chain (1985) splits a company's activities into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (firm infrastructure, human resources, technology development and procurement). It shows where cost is incurred and where value, and advantage, is created. The wider chain from raw materials to the end customer, across many companies, is called the industry value chain or value system. In a case, follow the profit number that moved to the step where it is made or lost, rather than walking every activity.
Where does it come up in case interview prep?
- Value chains and profit poolsLesson in How industries work: the toolkit
- Getting industry-aware fast: the 10-minute industry scanLesson in How industries work: the toolkit
- ESG beyond carbon: governance, labour, supply chains and the EU rulesLesson in People, rules and responsibility: organisation, regulation and sustainability
- Issue trees and driver treesLesson in How to structure any problem
- How pharma, biotech and medtech workLesson in Pharma, biotech and medical devices
- Diagnosing a profit decline: the reference caseLesson in Profitability
- How healthcare systems work: patients, providers and payersLesson in Healthcare providers and payers
- Structured brainstorming, and ranking the ideasLesson in Brainstorming and creativity
- Value chainWhy reciting it fails, and what to do instead
Related terms
- Vertical integrationOwning more stages of your own supply chain.
- CostWhat it takes to make and sell the product in a period.
- FrameworkA ready-made list of buckets for a common kind of case; know the words, do not recite them.
- Porter's Five ForcesFive pressures on how profitable an industry is; vocabulary, not a case structure.
- Porter's generic strategiesCompete on lowest cost, on being different, or by focusing on a niche.
- BCG growth-share matrixSorting businesses by market growth and relative market share.
- Ansoff matrixFour growth routes: existing or new products in existing or new markets.
- McKinsey 7S frameworkSeven parts of an organization that must fit together.
Learn it in context
See Value chain at work in a lesson from How industries work: the toolkit, with checks as you go.
Spotted something wrong or out of date? Report a mistake. We check every report and correct the page.