This research was conducted to study the relationship between performance levels ofrnorganizational value adding activities and profitability of selected leather products manufacturersrnin Addis Ababa based on the value chain model developed by Porter (1985).rn35 different organizations were included in the study. Primary data from each of thernorganizations was collected through questionnaires. Secondary document analysis was alsornconducted by accessing financial and accounting records. Theoretical framework review andrnprevious researches and studies in light of the current industry situation were used as an input forrnanalysis and discussion of results.rnThe data collected was descriptively analyzed through tabular summarization of the collectedrnsurvey results, along with discussions. Correlation analysis was conducted to see how significantrnthe associations of the value adding activities performance levels of the organizations are withrntheir profitability. Furthermore, inferential statistics and hypothesis testing was undertaken in thernform of median tests and ANOVA to test the assumption that difference in performance level inrnthe organizational value adding activities determines the variability in profit margins of thernorganizations.rnSignificant results were obtained from both the parametric and non parametric statistical tests.rnCorrelation analysis results showed that the dependent and independent variables have positivernand significant correlation. Also significant results from Analysis of variance taking operatingrnprofit margin of organizations as the response variable and performance levels of value addingrnactivities as factors proved that organizational profitability is determined and depends on allrnprimary and support value adding activities performance levels.