The so-called enterprise value chain refers to a collection of different but interrelated economic activities that create value for an enterprise. Each business management activity is a link in the value chain. The value chain is used as a tool for analyzing and diagnosing companies to identify and create more customer value concessions, and each company combines a range of activities that design, produce, sell, deliver, and support its products. The value chain breaks down the value-creating and cost-generating activities in a particular industry into nine strategically interrelated activities. These nine value-creating activities are further categorized into five basic activities and four supporting activities.

Basic activities refer to the sequential activities of purchasing raw materials, processing, shipping products out of the company, marketing, and after-sales service, and supporting activities are always present in these major activities. Procurement refers to the purchase of various inputs required for each basic activity, of which only a small portion is handled by the purchasing department; each basic activity engages in technological development, of which only a small portion is carried out by the research and development department; all departments also require human resource management; the company's infrastructure involves the general management of all the basic and supportive activities, the planning, financial, accounting, legal and governmental day-to-day expenditures required by the relevant firms.

Businesses must examine the cost and performance of each value-creating activity in the light of customer value and competitive requirements, seek improvements, and coordinate systems between different departments. In many cases, enterprise departments have a tendency to emphasize the maximization of departmental interests. For example, the finance department of an enterprise may engage in a complex program that takes a long time to review the credit of potential customers to avoid bad debts, with the result that the cost of the customer's time is high and the performance of the enterprise's sales department suffers. High barriers across departments are a major obstacle to quality customer service and high levels of customer satisfaction. Extending the firm's value chain outward creates a value chain consisting of suppliers, distributors, and final customers, which will be referred to as the supply and distribution value chain or value cession system. The structure of the supply and marketing value chain is shown in Figure 3-3.

Creating a high level of customer satisfaction requires the ****same efforts of the supply and distribution chain members. Therefore, many companies strive to work with other members of their supply and distribution chain to improve the performance of the entire system and increase competitiveness.

For example, a company uses electronic information systems to strengthen cooperation and business coordination with its distributors and suppliers. Each evening, the company uses electronic data interchange to obtain detailed information on the sizes and models of jeans sold by its major retailers and other major retail outlets, and then orders the next day's fabric colors and quantities from its fabric supplier. The fabric supplier, in turn, orders fiber from the fiber supplier. In this way, all participants in the supply and distribution chain use the most up-to-date sales information to produce the right product in the right quantity and quality, rather than on the basis of "estimates". In this way, Levi's competition with other denim manufacturers becomes a competition for performance between different supply and distribution value chain systems. Not every one of the many "value activities" in a firm's value chain creates value. The value created by an enterprise tends to be concentrated in certain specific value activities in the value chain. These value-creating activities are the strategic links in the value chain.

According to the principle of monopoly advantage in economics (in a fully competitive market, competitors can only get the average profit; if the excess profit can exist for a long time, there must be some kind of monopoly advantage caused by the "barriers to entry", preventing the entry of other enterprises), the theory of the value chain that the monopoly advantage of the industry comes from the monopoly advantage of some specific links in the industry. According to the value chain theory, the monopoly advantage of an industry comes from the monopoly advantage of some specific links in the industry. By seizing these key links, i.e. strategic links, the entire value chain is also seized. Strategic links can be product development, process design, marketing, information technology, or personnel management, depending on the industry. Generally speaking, the strategic link in the high-end fashion industry is design capability; in the restaurant industry, it is location selection; and in the tobacco industry, it is advertising and public **** relations.

The key to preserving a firm's monopoly advantage is to maintain monopoly advantage in the strategic links of its value chain, without generalizing it to all value activities. The strategic links should be tightly controlled within the enterprise, while many non-strategic activities can be contracted out to minimize costs by utilizing the market as much as possible and enabling the enterprise to focus its limited resources on the strategic links to enhance its monopoly advantage and improve customer satisfaction.

The monopolization of strategic links can take many forms, including monopolization of key raw materials, key talents, and monopolization of key sales channels and key markets. For example, in the industry relying on special skills competition (advertising, performance industry, sports professionals, etc.), the need to monopolize a number of key talents; in the industry relying on product characteristics of competition, the monopoly advantage comes from the key technology or raw material formulas (such as Coca-Cola's original formula, McDonald's "Big Mac" hamburger special ingredient formulas); in the high-tech industry, the monopoly advantage usually comes from a number of key raw materials, key raw materials and key markets, and so on. In high-tech industries, monopoly advantage usually comes from monopolizing a number of key production technologies.

As competition intensifies and experience is gained, cooperation between companies is increasing. In the past, enterprises always regarded suppliers and distributors as the main objects leading to cost increases; they began to carefully select partners, develop mutually beneficial strategies, and forge supply and marketing value chains in order to form stronger team competitiveness and win more market share and profits.