Value chain analysis is a technique in which an organization identifies and analyses its primary activities that add value to its final product to reduce costs or increase differentiation. The value chain represents a company's internal activities when converting inputs into outputs. The value chain analysis is a strategy tool for analyzing internal firm activities. Its goal is to identify which activities are the most valuable to the firm (i.e., the source of cost or differentiation advantage) and which could be improved to provide a competitive advantage. In other words, the analysis reveals a firm's competitive advantages and disadvantages by looking at internal activities.
