Many organizations do not achieve expected profits by using incorrect methods or models to determine the true costs of products and services. This inability to correctly evaluate the costs associated with the business not only affects the profit margin, but also the competitive advantage of the organization. To assess whether the organization is failing to achieve optimal resource allocation, the organization should examine the methodology first popularized by Michael Porter titled Value Chain Analysis (VCA). “VCA seeks to define the entire chain through which goods are supplied to a customer” (Booth, 1997, 2). VCA can be a powerful tool for increasing an organization's competitive advantage; By properly evaluating products and evaluating the true costs of materials and labor, organizations can align improvements in efficiency, quality and profits with their strategic objectives. Before explaining the benefits that a value chain can offer, it is important to first identify the value chain itself. According to Stabell and Fjeldstad (1998) Porter's work on VCA began with the division of an organization's activities into two categories, primary activities and support activities (see Figure 1): primary activities are directly involved in creating and bring value to the customer, while support activities enable and improve the performance of primary activities... The support label emphasizes that support activities affect the value provided to customers only to the extent that they affect the performance of primary activities ( p 417). Within the value chain, it is important for an organization to correctly identify how each primary activity category relates to its organization. The first part… middle of the paper… can be critical to improving sales to customers. If a customer doesn't see the value in an organization's product, they may start purchasing a competitor's product based on price alone. Price is not the only competitive advantage an organization can have, but if it is unable to articulate value other than price, it can significantly reduce the organization's competitive advantage. Bibliography Booth, R. (January 1997). Appreciate the value before counting the cost. Management accounting: magazine for chartered accountants. 57(1). Retrieved 10/11/2006 from the EBSCOhost database. Stabell, CB and OD Fjeldstad. (1998). Strategic Management Journal. 19, 413-437. Retrieved November 11, 2006, from the EBSCOhost database. The Value Chain (2006). NetMBA: Business Knowledge Center. Retrieved November 11, 2006, from: http://www.netmba.com/strategy/value-chain/