Value Chain Analysis—Executing Business Strategies Firms make profits by taking raw inputs and applying business process to turn them into a product or service that customers find valuable. A business process is a standardized set of activities that accomplish a specific task, such as processing a customer’s order. Once a firm identifies the industry it wants to enter and the generic strategy it will focus on, it must then choose the business processes required to create its products or services. Of course, the firm will want to ensure the processes add value and create competitive advantages. To identify these competitive advantages, Michael Porter created value chain analysis, which views a firm as a series of business processes that each add value to the product or service. Value chain analysis is a useful tool for determining how to create the greatest possible value for customers (see Figure 2.7). The goal of value chain analysis is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself, with a cost advantage or product differentiation. The value chain groups a firm’s activities into two categories, primary value activities, and support value activities. Primary value activities, shown at the bottom of the value chain in Figure 2.7, acquire raw materials and manufacture, deliver, market, sell, and provide after-sales services. 1. Inbound logistics: acquires raw materials and resources and distributes to manufacturing as required. 2. Operations: transforms raw materials or inputs into goods and