Management And Accounting Web

A Business Flow Chart

Note by James R. Martin, Ph.D., CMA
Professor Emeritus, University of Sourth Florida

MAAW's Textbook Chapter 8 |
Value Chain Main Page


The business flow chart illustrated below is similar to the value chain concept discussed in the accounting literature since Porter used the term in 1985. However, in the business flow chart the emphasis is on the value increasing processes inside the business rather than on the entire value chain, i.e., including outside stakeholders and functions such as suppliers, distribution channels and customer service.

Business Flow Chart

See the following article for a discussion of the chart. 

Schonfeld, H. and H. P. Holzer. 1962. A "business" flow chart and its use as a teaching aid. The Accounting Review (January): 118-120. (JSTOR link).

Porter introduced the Value Chain concept in Chapter two of Porter, M. E. 1985. Competitive Advantage. The Free Press. The Value Chain for a company is part of a Value System as indicated in the illustration below. According to Porter "The basic tool for diagnosing competitive advantage and finding ways to enhance it is the value chain, which divides a firm into the discrete activities it performs in designing, producing, marketing, and distributing its product." (Competitive Advantage, p. 26). See MAAW's Textbook Chapter 8 for a discussion of the Value System.

Value Systems for a single industry firm and a diversified firm

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Some related Value Stream and Value Chain Article Summaries:

Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part I. Journal of Cost Management (March/April): 23-27. (Summary).

Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part II. Journal of Cost Management (May/June): 24-30. (Summary).

Donelan, J. G. and E. A. Kaplan. 1998. Value chain analysis: A strategic approach to cost management. Journal of Cost Management (March/April): 7-15.(Summary).

Carr, L. P., W. C. Lawler and J. K. Shank. 2002. Reconfiguring the value chain: Levi's personal pair. Journal of Cost Management (November/December): 9-17. (Summary).