Critically Examine How Useful the ‘Sector Matrix’ Framework Is

“Competitive Advantage introduces the concept of the value chain, a general Framework for thinking strategically about the activities involved in any business and assessing their relative cost and role in differentiation”. Michael Porter, (1985).

Effective value chain as a competitive advantage can contribute significantly to the prosperity of a firm in the competitive arena, but it can cause dire situations if not operated properly (Guy, 2011). However, there are conflicts among companies as to how stakeholders think they gain competitive advantage. Porter (1996) suggests: A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at lower cost or do both.

The writings of the American managementguru and Harvard-Professor Michael E-Porter are considered to be among the most influential of their subject – and among the most critiqued ones. Porter had a lasting influence on strategic management with his books about competitive advantages on industry level and on global level, which were written in the eighties. Porter’s models like the Five Competitive Forces, the Value Chain or Porters Diamond have become standard equipment of the manager’s toolbox. Porter’s ideas became more and more subject of critique under the impression of the developing Internet economy during the last decade. Critics point out that economic conditions have

Value chain is a part of the company’s core competences which plays a very important part to get competitive advantage on its competitors. A value chain is a whole series of activities that create value or add value to the end product. The total value delivered by the company is the sum of the total value built up all throughout the company. Michael porter developed this concept in his 1980 book ‘competitive advantage.

The second theory involved in this chapter is Porter’s value chain. In 1985, the concept of value chain was introduced by Michael Porter in his popular book "Competitive Advantage: Creating and Sustaining Superior Performance". In this concept, the business activities are separated into primary activities and support activities.

The idea of the value chain has been proposed by Michael Porter in his book "Competitive Advantage" to identify the sources of competitive advantage through analysis of certain types of activity of the company. In foreign economic literature makes a clear distinction between the chains, initiated by producers and buyers. Value chain "divides the company 's operations in the strategically important activities to examine the costs and existing and possible means of differentiation." The competitive

The more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage. This is what Michael Porter discussed this in his influential 1985 book competitive Advantage in which he first introduced the concept of the value chain.

Value chain analysis is also a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage. In other words, by looking into internal activities, the analysis reveals where a firm’s competitive advantages or disadvantages are. The firm that competes through differentiation advantage will try to perform its activities better than competitors would do. If it competes through cost advantage, it will try to perform internal activities at lower costs than competitors would do. When a company is capable of producing goods at lower costs than the market price or to provide superior products, it earns profits.

If a firm sustain profits that exceed the industry average, said firm is said to have a competitive advantage. The goal of any given business strategy is to achieve a competitive advantage. Moreover, the goal of a successful business strategy is a sustainable competitive advantage. The question is how does a firm create that competitive advantage? According to Michael Porter, to achieve a competitive advantage, a firm must perform one or more value creating activities in a way that creates more overall value than competitors (1985). The purpose of this paper is to examine how the value chain creates competitive advantages. It will review the concepts of the value chain, the inter-relationship of these

Now a day, many companies are trying to improve their value chain in order to use the value chain as a strategy in the manner of meeting the customers need and satisfaction. One of the strategies they are using with value chain is to gain competitive advantages for rival among their competitors. Value chain actually can discover and fulfil what customers want and the identification of customer needs will hence become one of the ways to surpass their competitors in term of competitive advantages. Customers can have the best satisfaction of the things that they really want, at an acceptable price level. In other words, a company overall competitive advantage derives from the difference between

Value chain analysis relies on the basic economic principle of advantage — companies are best served by operating in sectors where they have a relative productive advantage compared to their competitors. Simultaneously, companies should ask themselves where they can deliver the best value to their customers.

Competitive advantage cannot be assessed by a mere holistic look at the organisation. One has to look deep into every activity performed in the organisation to comprehend the differentiating factors and cost position. Michael Porter’s Value chain helps us to look into each and every aspect of the firm and hence we are better equipped to determine the areas of improvement as well as the activities which give us an edge over others. (Porter, 1985)

The value chain approach was developed by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilised to develop an organisation’s sustainable competitive advantage in the business arena of the 21st C. All organisations

Deviating from the industry value chain first introduced by Porter (1985) and later adapted by Gereffi (1996), a fairly recent alternative has been established by Froud, Haslam, Johal & Williams (1998) called the ‘sector matrix’. Until about a decade ago competitive focus was on the production process, the steps taken to develop a product being the ‘primary’ activities and company strategies outlined as ‘support’ activities. With continually increasing complexity within corporations, new and more innovative means of analysis are required. A

Porter proposed that a firm’s competitive advantage in an industry is determined by its competitive scope. The competitive scope is the breadth of the company’s or business unit’s target. The competitive scope with the relation to Porter’s Competitive