Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses.

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Value chain analysis is a strategic tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e., are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage. Thus, it helps in understanding a firm's strengths and weaknesses.

Value Chain Analysis Assumes That a Firm's Basic Economic Purpose