The value chain conceives of each step in the production of a product or the delivery of a service as a link in a chain that adds value to the product or service.

These value-adding steps—research and development, design, supply, production, marketing, distribution, and customer service—are known as primary processes. The value chain also includes support services—human resources, legal services, information services, and management accounting.

Support services facilitate the primary processes but do not add value to the final product. Value chain analysis enables a company to focus on its core competencies.

Parts of the value chain that are not core competencies are frequently outsourced.