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Video of What is Value Chain Components? Simply Explained W/Example. Cost Accounting Course. CPA BAR Exam in Costs Accounting course by Farhat Lectures. The # 1 CPA & Accounting Courses channel, video No. 26 free certified online
What are the components of the value chain? This lecture explains the value chain model for CPA (BAR) and CMA exam candidates — the series of business functions that transform raw materials into finished goods and services that create customer value. Using an electric car battery example, Professor Farhat walks through each stage and shows how cost accounting tracks costs across the chain to maximize value. Ideal for accounting and business students studying managerial and cost accounting.
Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students.
Video Timeline & Key Concepts:
0:00 — Introduction
0:56 — What is a Value Chain: activities that transform raw materials into value for the customer
2:46 — Research and Development: creating and testing new product ideas
3:20 — Design: engineering the product, service, or process
3:57 — Purchasing: acquiring raw materials from vendors
4:25 — Production: assembly and manufacturing
4:55 — Marketing and Sales: informing customers and promoting the product
5:16 — Distribution: delivering products to customers
5:32 — Customer Service: post-sale support, warranties, and repairs
6:09 — Administrative Functions: why HR and accounting support but are not part of the value chain
6:51 — Supply and Distribution Chains: the external boundaries of the firm
Frequently Asked Questions:
What is the value chain?
The value chain is the series of business activities that transform raw materials into finished goods or services that provide value to the customer. It typically spans research and development through customer service.
What are the main components of the value chain?
The core components are research and development, design, purchasing, production, marketing and sales, distribution, and customer service. Each stage adds value as a product moves toward the customer.
Are administrative functions like HR and accounting part of the value chain?
No. Functions such as human resources and accounting are support functions that are integrated into every business function, but they are not themselves value chain activities.
What is the difference between the supply chain and the distribution chain?
The supply chain consists of external suppliers that provide materials to the firm, while the distribution chain involves external entities that purchase and deliver the final goods. Together they mark the boundaries of the firm.
How does cost accounting relate to the value chain?
Cost accounting tracks and analyzes costs across each value chain activity. This helps managers understand where value is created, control spending, and improve organizational efficiency.
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