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:
“There is a concept that is the corrupter and destroyer of all others. I speak not of Evil, whose limited empire is that of ethics; I speak of the infinite.”
—Jorge Luis Borges (1899–1986)
“Terror is as much a part of the concept of truth as runniness is of the concept of jam. We wouldn’t like jam if it didn’t, by its very nature, ooze. We wouldn’t like truth if it wasn’t sticky, if, from time to time, it didn’t ooze blood.”
—Jean Baudrillard (b. 1929)
“I think that Richard Nixon will go down in history as a true folk hero, who struck a vital blow to the whole diseased concept of the revered image and gave the American virtue of irreverence and skepticism back to the people.”
—William Burroughs (b. 1914)