ITM 102 Chapter 4: Chapter 4

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The value chain is a connected series of activities, each of which adds value or supports the addition of value to the firm"s goods and services1. Every action an organization takes, from securing the necessary raw materials (input) to making the goods or service (process) to completing a transaction with a customer (output), is either a primary activity or support activity. A transaction is an exchange of goods or services (value) between two or more parties. Primary activities are directly related to the production and distribution of the organization"s products and services that create business value for the organization and its customers. Example primary activities include inbound logistics (obtaining raw materials), operations (creating the product), outbound logistics (shipping the product), and marketing, sales, and service (selling the product) Support activities are value chain activities that an organization conducts to support the creation of business value.