Concept
Analysing the firm's activities as a linked chain is a tried and tested way of revealing value creation opportunities. The business economist Michael Porter of Harvard Business School pioneered this value chain approach: "the value chain disaggregates the firm into its strategically relevant activities in order to understand the costs and existing potential sources of differentiation". It is the micro mechanism at the level of the firm that equalizes supply and demand at the macro market level.
Early applications in distribution, manufacturing and purchasing collectively gave rise to a subject known as the supply chain. Old supply chains have been transformed into faster, cheaper and more reliable modern supply chains as a result of investment in information technology, cost-analysis and process-analysis.
Marketing, sales and service are the other half of the value-chain, which collectively drive and sustain demand, and are known as the Demand Chain. Progress in transforming the demand side of business is behind the supply side, but there is growing interest today in transforming demand chains.
Read more about this topic: Demand Chain
Famous quotes containing the word concept:
“Jesus abolished the very concept of “guilt”Mhe denied any cleavage between God and man. He lived this unity of God and man as his “glad tidings” ... and not as a prerogative!”
—Friedrich Nietzsche (1844–1900)
“By speaking, by thinking, we undertake to clarify things, and that forces us to exacerbate them, dislocate them, schematize them. Every concept is in itself an exaggeration.”
—José Ortega Y Gasset (1883–1955)
“The latest creed that has to be believed
And entered in our childish catechism
Is that the All’s a concept self-conceived,
Which is no more than good old Pantheism.”
—Robert Frost (1874–1963)