In e-commerce, a number of business process and activities go unnoticed by the consumer
and are often taken for granted. With an online merchant's business, value-added activities work
together to make the business-to-consumer interface operational.
In 1985 Michael Porter wrote a book called Competitive Advantage, in which he introduced
the concept of the value chain. Businesses receive raw materials as input, add value to them
through various processes, and sell the finished product as output to customers.
Competitive advantage is achieved when an organization links the activities in its value
chain more cheaply and more effectively than its competitors. For example, the purchasing function
assists the production activity to ensure that raw materials and other supplies are available on time
and meet the requirements of the products to be manufactured. The manufacturing function, in turn,
has the responsibility to produce quality products that the sales staff can depend on. The human
resource function must hire, retain, and develop the right personnel to ensure continuity in
manufacturing, sale, and other areas of the business. Bringing in qualified people contributes to
stability, continuity, and integrity of operations throughout the firm.
There is no time sequence or special sequence of activities before a business is considered
successful or effective. The idea is to link different activities in such a way that the value-added
(output) of one activity (department, process, etc.) contributes to the input of another activity.
The integration of these activities results in an organization fine-tuned for profitability and
According to Porter, the primary activities of a business are:
Inbound logistics. These are procurement activities vendor selection, comparative shopping,
negotiating supply contracts, and just-in-time arrival of goods. They represent the supply side of
the business. In e-commerce, the business must be capable of exchanging data with suppliers
quickly, regardless of the electronic format.
Operations. This is the actual conversion of raw materials received into finished products. It
includes fabrication, assembly, testing, and packaging the product. This production activity
provides added value for the marketing function. Operational activities are the point in the value
chain where the value is added. These happen in the back-office where the pizza is baked, the
PCs are assembled, or the stock trades are executed. Data are shared at maximum network speed
among internal and external partners involved in the value-adding processes.
Outbound logistics. This activity represents the actual storing, distributing, and shipping of
the final product. It involves warehousing, materials handling, shipping, and timely delivery to
the ultimate retailer or customer. The output of this activity ties in directly with marketing and
Marketing and sales. This activity deals with the ultimate customer. It includes advertising,
product promotion, sales management, identifying the product's customer base, and distribution
channels. The output of this activity could trigger increased production, more advertising, etc.
Service. This activity focuses on after-sale service to the customer. It includes testing,
maintenance, repairs, warranty work, and replacement parts. The output of this activity means
satisfied customers, improved image of the product and the business, and potential for increased
production, sale, etc.
Primary activities are not enough. A business unit needs support activities to make sure the
primary activities are carried out. Imagine, for example, a manufacturing concerns with no
people or with poorly skilled employees.
The key support activities in the value chain are:
Corporate infrastructure. This activity is the backbone of the business unit. It includes general
management, accounting, finance, planning, and legal services. It is most often pictured in an
organization chart showing the relationship among the different positions, the communication
network, and the authority structure. Obviously, each position holder must add value to those above
as well as below.
Human resources. This is the unique activity of matching the right people to the job. It
involves recruitment, retention, career path development, compensation, training and development,
and benefits administration. The output of this activity affects virtually every other activity in the
Technology development. This activity adds value in the way it improves the product and
the business processes in the primary activities. The output of this activity contributes to the
product quality, integrity, and reliability, which make life easier for the sales force and for
Procurement. This activity focuses on the purchasing function and how well it ensures the
availability of quality raw material for production.
Where does e-commerce fit in? The value chain is a useful way of looking at a corporation's
activities and how the various activities add value to other activities and to the company in
E-commerce can play a key role in reducing costs, improving product quality and
integrity, promoting a loyal customer base, and creating a quick and efficient way of selling
products and services. By examining the elements of the value chain, corporate executives can
look at ways of incorporating information technology and telecommunications to improve the
overall productivity of the firm. Companies that do their homework early and well ensure
themselves a competitive advantage in the marketplace.
1, fine-tune ['faintju:n]
2, profitability [,prɔfitə'biliti]
3, fabrication [,fæbri'keiʃən]
4, ultimate ['ʌltimit]
5, compensation [kɔmpen'seiʃən]
6, recruitment [ri'kru:tmənt]
n. 征募新兵, 补充
7, retention [ri'tenʃən]
8, loyal ['lɔiəl]