The Value Chain

Harvard's Michael Porter has proposed the value chain as a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver, and support it's products.

The firm's success depends not only on how well each department performs its work, but also on how well the company coordinates departmental activities to conduct core business processes. The processes include:

  • The market-sensing process: All the activities in gathering and acting upon information about the market.
  • The new-offering realization process: All the activities in researching, developing, and launching new higher quality offerings quickly and within budget.
  • The customer acquisition process: All the activities in defining target markets and prospecting for new customers.
  • The customer relationship management process: All the activities in building deeper understanding, relationships, and offerings to individual customers.
  • The fulfillment management process: All the activities in receiving and approving orders, shipping the goods on time, and collecting payments. 

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