Primarks Value Chain Analysis

By: Jonathan Kush

The value chain refers to a set of activities within an organization, which together help it create or produce a product or service. First developed by Michael Porter, the purpose of the value chain is to help firms identify value adding activities they are undertaking, that either add (or don’t add) value to their product or service. Once disaggregated, such activities can help provide a more precise understanding of all firm activities and the capabilities corresponding to each activity so as to understand where competitive advantage is being derived. In this report, we examine Primark’s value chain to try and understand which activities have helped the company become a low cost leader in the UK clothing retailing industry. While Primark’s value proposition of low prices isn’t unique, the company’s execution of particular activities including inbound and outbound logistics is comparable to none, helping keep logistical costs very low and the processes very efficient, consequentially driving costs down. Few clothing companies have mastered distribution, logistical and inventory management like Primark, the very areas of the value chain it has derived the most value.

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