Value Chain Analysis"Accounting for Strategic Management Porter identified the "value chain" as a means of analyzing the strategically relevant activities of an organization in order to Understanding cost behavior Competitive advantage comes from performing these activities in a more cost-effective manner than competitors. This essay describes the activities called value chain and explains how value chain cost analysis can be done. carried out in order to facilitate profitability (in Competitive Advantage, 1985) divides the value chain (CV) model into two distinct types, namely core activities and supporting activities (Bowman C., 1990, p63). ).The model suggests that regardless of the number of operational units involved in the customer value generation process these main activities can be conceptualized in five generic stages: inbound logistics, operations, outbound logistics; , marketing and sales, and service. These primary stages are supported by business infrastructure, human resource management, technology development, and purchasing and supplies. The steps within the CV should not be considered in isolation but examined in a broader context and include interactions between steps, not just within processes. The relationship between sales, operations and purchasing, for example, can determine the amount of inventory to carry and therefore be reflected in the cost of inventory held. When analyzing the venture capital of a given company/organization, the management accountant (MA) must first identify the activities of It is up to the company to establish the chain framework.• o "...Porter suggests the detailed allocation of operating costs and assets to each valuable activity" (Grant RM, 1995, p193). A company producing computers and an accounting firm, for example, would have very different components within the chain due to the differentiating activities (see below); this framework will allow us to establish the relevant importance of each activity unit in terms of costs. As you can see, the relevance of operations within the manufacturing company is higher than that of operations within accounting. With over 60% of its costs allocated to operations, it would seem that the manufacturing company should focus on this area to maximize savings, as it is the largest cost driver. The accounting firm, however, considers the two biggest cost drivers to be operations at 26% and marketing at 21%, suggesting almost equal savings potential may be offered. As an AM, we need to identify cost drivers, similar to ABC costing..