A value chain refers to a set of activities within and around an organization, which help an organization create or produce a product or service (Johnson et al 2008). The value chain categorizes organizational activities into either primary activities or support activities. Firms put together value adding primary and support activities, which help a firm to transform inputs into outputs in an efficient manner so as to create competitive advantages. For any firm to have a successful broad strategy that delivers sustained competitive advantage, its value chain must successfully support its strategy by adding value to its products and services.
When applied concertedly, a value chain can help firms identify where value is currently added in the system and where there is potential to create further value in the future by reconfiguring and improving coordination of activities.