Value chain analysis is a strategic management tool introduced by Michael Porter in his 1985 book Competitive Advantage that breaks a company's activities into a sequence of primary and support activities in order to identify where value is added and where competitive advantage can be created or lost. Primary activities in Porter's model include inbound logistics, operations, outbound logistics, marketing and sales, and service, while support activities include procurement, technology development, human resource management, and firm infrastructure. Managers use the analysis to examine each activity's costs and contribution to the value delivered to customers, in order to find opportunities to reduce costs or increase differentiation relative to competitors.
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