What Is a Value Chain? - Definition, Analysis & Example

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  • 0:03 What Is a Value Chain?
  • 0:36 Value Chain Analysis
  • 1:24 Value Chain Example
  • 2:32 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield
This lesson discusses what a value chain is and how it can help a business meet the needs of customers. It also provides an analysis of the effectiveness of the value chain actions.

What Is a Value Chain?

A value chain is a way to look at two different types of business activities: the first action that creates value for a customer and the following action that supports the execution of the first action. For instance, a grocery store may determine that offering grocery delivery is the first action that will create value for the customer. The following actions that support the grocery delivery may include online ordering, same-day delivery, and scheduling automatic weekly delivery. These multiple activities are linked together to create value for the customer.

Value Chain Analysis

When analyzing a value chain, it is important for a company to evaluate which actions are most valuable to the customers, providing the greatest level of satisfaction and convenience. Once the company has determined what customers truly want, they must analyze whether the activities are feasible and can be provided for their customers. Once it is determined the service or action is feasible, the company can create an action plan of value chain activities to deliver the service.

The value chain analysis doesn't end there. A proactive company will review the value chain activities and see if the customers are satisfied with the results. There may be new steps that can be added or altered in the value chain that will make the process smoother or offer greater value, thus strengthening the effects of the value chain.

Value Chain Example

Let's say that you are the manager of a specialty kitchen store. Customers come to you for cool gadgets and new kitchen accessories. However, you believe you can increase sales if you can show customers new ways to use the products in your store.

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