Making the case for the added‐value chain

Abstract

Purpose Porter's value chain has been a keystone of strategic analysis. However, because of processes associated with economic globalization: outsourcing, brand marketing and “knowledge economy” phenomena, value drivers have changed dramatically over the last 20 years. The added‐value chain provides an expanded mental model for practitioners and academics to develop and communicate strategies for value creation. Design/methodology/approach The expanded set of activities in the added‐value chain was developed based on experience using the value chain in real world situations and analyzing leading business and strategy models that are commonly used by firms today. Findings The added‐value chain incorporates new sources of value creation such as the firm's brand, reputation and “social capital” or goodwill in addition to profit margin. The Added‐Value Chain also adds three primary activities. Practical implications Managers performing value‐chain analysis need to take into account newly important business drivers. Originality/value Expanding the value chain ensures that no potential strategic activity is forgotten and no opportunity for enhancing value is over‐looked.