This post presents a critical analysis of Porter’s Value Chain Analysis (VCA) framework by considering both its benefits and its limitations. It first defines the concept of value chain, discusses the primary and support activities, illustrates how to achieve competitive advantage using value chain, analyzes differentiation and cost using value chain, and finally analyzes all the weaknesses and limitations of the framework. For a critical analysis of Porter’s Five Forces model in IT industry, kindly check out my article Critical Analysis of Porter’s Five Forces Model – Information Technology (IT) Industry.
In order to appropriately formulate their corporate strategies and distinctively compete in the market, organizations are in a need for a framework that would help them in understanding industry structure and in overcoming rivalry. This essay aims at discussing, analyzing, and criticizing Porter’s Five Forces model using a wide variety of academic literature. The first part introduces the model, discusses its benefits, and provides a detailed discussion of the five forces and their underlying influential factors. The second part criticizes the validity of this model in today’s rapidly changing environment especially in the IT industry. The third and final part applies the model in the IT industry in order to determine its attractiveness and profitability level. For a critical analysis of Porter’s Value Chain Analysis (VCA) framework, kindly check out my article Critical Analysis of Porter’s Value Chain Analysis (VCA) Framework.