A value chain is the sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step. When the total value created$$that is$,$ what customers are willing to pay$$exceeds the cost of providing the good or service, the result is the organization's profit margin. Managers can add customer value and build competitive advantage by paying close attention to their organization's value chain$$not only each step in it$,$ but the way each step interacts with the others.

One way to understand how organizations can add customer value to their products has been provided by Michael Porter, who popularized the concept of the value chain.

The goal of this activity is to identify what activities occur in each of the steps of a value chain.

This activity is important because it shows how the value chain impacts competitive advantage.