Pc

A value Chain is a chain of different activities engaged in production of commodity, service etc. which are targeted towards a common objective of value addition and profit generation. A value chain has different constituents which act and contribute to adding value to a product. In the process of this value addition these constituents interact with other partners in the chain. As a result of the actions of these members the extent of profits and value addition of others is also affected. This interaction between the various constituents of the chain is the essence of value chain analysis. In value chain analysis action of one member of the chain will affect and determine the profits for all members. The member who has the capability to affect the most is termed as controlling the value chain and is at an advantage point. However, there cannot be only one person controlling the chain but the extent of influence can be varied and powerful. The example of Windows shows the concept of advantage point as Windows position controls the fortune of the PC industry value chain. Price of Windows will determine the price of a PC and will determine the demand and overall revenues of the PC industry. However as explained in the concept, Windows is not the only person controlling the chain.

The scale of market in the value chain determines the extent of division of labour with greater scale resulting in finer division of labour. This concept encourages business managers to increase the scale of their operations so that they can have more division of labour and better and effective utilization of resources.