Virðiskeðja

Virðiskeðja, a term originating from Icelandic, translates to "value chain" in English. It refers to the complete range of activities required to bring a product or service from conception, through the different phases of production, delivery to final consumers, and eventual disposal. Each step in the value chain adds some form of value to the product or service.

The concept of a value chain was popularized by Michael Porter in his 1985 book "Competitive Advantage: Creating and Sustaining Superior Performance." Porter's model breaks down a company's activities into primary and support activities. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities, which enable the primary activities, consist of firm infrastructure, human resource management, technology development, and procurement.

Understanding a company's value chain is crucial for identifying sources of competitive advantage. By analyzing each step, businesses can pinpoint areas where they can reduce costs, improve efficiency, or enhance product/service quality. This strategic analysis helps organizations optimize their operations and gain a competitive edge in the market. The goal is to maximize the value created for customers while minimizing the costs incurred in the process.