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value chain

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value chain

In business, companies working together to meet market demands. Typically this involves a smaller number of primary value product or service suppliers plus many tertiary value suppliers who increase the value of the product or service to the consumer.

One example is that of Microsoft, a primary value supplier, supplying the operating system for a PC; yet without all the other companies who add value by making software to run on the Windows operating system, the product's attractiveness to the consumer would be greatly limited. Management consultants McKinsey once estimated that in the case of the value chain based on the Windows operating system and controlled by Microsoft, worth some $383 billion, Microsoft only had a 4% share of the total value.
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