Value chains

Question

Do all businesses have value chains? Or is this applicable only to manufacturing/ oil & gas/mining type of companies? For example can I ask what the value chain of a gas retailer would look like?

Answer 1

Hi there,

I think it is easier to answer starting from the definition of a value chain ;)

A common definition of a value chain is a “full chain of a business's activities in the creation of a product or service”.

Given that definition, every company with a product or service should have a value chain.

Hope this helps,

Francesco

Answer 2

Any company that makes and sells (or delivers) a product or service regardless of which industry it belongs to, will have a value chain. This includes public sector and not for profit as well.

Answer 3

Let us look at it the other way around - you can define a value chain for every business.

A value chain ‘defines’ a business.

A value chain outlines the different steps it takes to do a business activity.

For a typical O&G company - the value chain consists of elements like exploration, production, storage and shipping, refining and marketing. Many gas retailers also have presence in upstream. If you are only a retailer then your value chain will have elements like sourcing, storage, supply etc.

I have worked on several Energy projects - let me know if you would like a detailed discussion to understand the value chain.

Answer 4

If you don't, you're a pretty bad company!

Every company adds some form of value (real or perceived). As such, every company does indeed have a value chain, whether they product a product or even offer a service!

Answer 5

Hello!

Yes, for sure! Don’t be stopped by a “fancy term” like that, value chain is simply the chain of all the activities and steps that any business does in order to create value.

This said, that is not a question that will help in all type of cases (e.g., in a profitability type of case, knowing the details about the value chain won’t be so useful and can distract you from the real target).

That knowledge is particularly useful for the so-called value chain type of cases, where picturing the chain is key to understand where the problem is and give solutions. Feel free to reach out so I can send you an example of those.

Hope it helps!

Cheers,

Clara