Value Chain Glossary: Value Chain Approach
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Value Chain Approach
A method of achieving economic growth and reducing poverty that utilizes research undertaken to understand a market system in its totality: the firms that operate within an industry—from input suppliers to end market buyers; the supporting markets that provide technical, business and financial services to the industry; and the business environment in which the industry operates.
Value Chain Structure
Such a broad scope for industry analysis is needed because the principal constraints to competitiveness may lie within any part of this market system or the environment in which it operates. Value chain analysis is a critical component of program design. While it may be beyond the capacity or outside the mandate of a donor or implementing agency to address certain constraints, the failure to recognize and incorporate the implications of the full range of constraints will generally lead to limited, short-term impact or even counter-productive results.
Key elements of the value chain approach include:
- A market system perspective.
- A focus on end markets.
- Understanding the role of value chain governance.
- Recognition of the importance of relationships
- Facilitating changes in firm behavior.
- Transforming relationships.
- Targeting leverage points.
- Empowering the private sector.
Related Articles
- Value Chain Approach
- End Markets
- Supporting Markets
- Key Elements of the Value Chain Approach
- Briefing Paper: Key Elements of the Value Chain Approach, July 2008.
- Briefing Paper: Value Chain Framework. Campbell, Ruth. January 2008.
