Critically Examine How Useful the ‘Sector Matrix’ Framework Is
Critically examine how useful the ‘sector matrix’ framework is for analysing demand and supply linkages in all industries. Use two contrasting examples
In recent years several frameworks have been developed for analyzing product markets and competitive advantages of companies. Many academic authors have tried to explain what gives competitive advantage in certain industries and how companies inside these industries should restructure in order to achieve greater profitability. This essay is firstly going to discuss the advantages of Porter Value Chain concept and its similarities to the Commodity Chain frameworks developed by Gereffi. Secondly the essay will contrast their concepts with the sector matrix frame work of Froud and explain which of these three framework analysis is more appropriate for analyzing supply and demand linkages in different industries. Car and apparel industry examples will be used to contrast the advantages and disadvantages of the different frameworks. Porter Value Chain framework was developed my Michael Porter in 1985 as “basic tool for diagnosing competitive advantage and finding ways to create and sustain it.”( Froud, J.Johal, S. Leaver, A. and Williams, K.2006, p. 101). The concept of Value Chain describes a company as a combination of two types of activities. The first type is primary activities such as inbounds logistics, operations, outbound logistics, marketing and sales, and service. The second type is support activities which are firm infrastructure, human resource management, technological development and procurement. All the nine activities described by Porter are interconnected and add value to the final product. His framework analyses a company assuming that it exists in the boundaries of a single country. According to Porter a firm should analyze its position in the market and its strengths and weakness inside the Five Forces Model, and then use the value chain framework to find opportunities for developing
In recent years several frameworks have been developed for analyzing product markets and competitive advantages of companies. Many academic authors have tried to explain what gives competitive advantage in certain industries and how companies inside these industries should restructure in order to achieve greater profitability. This essay is firstly going to discuss the advantages of Porter Value Chain concept and its similarities to the Commodity Chain frameworks developed by Gereffi. Secondly the essay will contrast their concepts with the sector matrix frame work of Froud and explain which of these three framework analysis is more appropriate for analyzing supply and demand linkages in different industries. Car and apparel industry examples will be used to contrast the advantages and disadvantages of the different frameworks. Porter Value Chain framework was developed my Michael Porter in 1985 as “basic tool for diagnosing competitive advantage and finding ways to create and sustain it.”( Froud, J.Johal, S. Leaver, A. and Williams, K.2006, p. 101). The concept of Value Chain describes a company as a combination of two types of activities. The first type is primary activities such as inbounds logistics, operations, outbound logistics, marketing and sales, and service. The second type is support activities which are firm infrastructure, human resource management, technological development and procurement. All the nine activities described by Porter are interconnected and add value to the final product. His framework analyses a company assuming that it exists in the boundaries of a single country. According to Porter a firm should analyze its position in the market and its strengths and weakness inside the Five Forces Model, and then use the value chain framework to find opportunities for developing
Bibliography: Books: Froud, J.Johal, S. Leaver, A. and Williams, K.(2006) Strategy and Financialisation : Narrative and Numbers, Routledge Haslam, C.Neale, A. Johal, S. third edition. (2000) Economics in a Business Context. Thomson Learning Online: BBC.co.uk. Nike profit rise fails to impress ( 2011 ) [press release] [online]. Available: http://www.bbc.co.uk/news/business-12780790 Journals: Froud, J, Haslam, C, Johal, S. & Williams, K. (1998) ‘Breaking the Chains? A Sector Matrix for Motoring’.Competition and Change; Vol 3