Page 218 - (DK) The Business Book

216

IF YOU DON’T HAVE

A COMPETITIVE

ADVANTAGE,

DON’T COMPETE

THE VALUE CHAIN

IN CONTEXT
The interconnected activities through which a company delivers
FOCUS products or services can be viewed as a “value chain.”
Competitive Advantage

KEY DATES
1933 US economist Edward
Chamberlin introduces the The chain consists of primary and secondary
value activities.
concept of product
differentiation in Theory of
Monopolistic Competition.
1970s The idea of competitive
Primary value
advantage takes hold as Secondary value
activities include inbound
Japanese companies begin activities include
logistics, manufacturing,
to outsell US and European procurement, HR,
outbound logistics,
rivals. This is later attributed marketing and sales, technology, and
to superior management. and after-sales service. infrastructure.
1979 US marketing consultants
Al Ries and Jack Trout write
Positioning: the Battle for Your
Mind, outlining how companies Through analysis of its value chain, a company can identify where
should build a strategy around to achieve cost or differentiation advantage on its products.
their competitors’ weaknesses.
1985 Michael Porter introduces
his theories of competitive
advantage and the value chain he goal of every company celebrated business guru, advised:
is to create and sustain a “If you don’t have a competitive
in Competitive Advantage:
T competitive advantage so advantage, don’t compete.”
Creating and Sustaining
that it can sell more products and US professor Michael Porter’s
Superior Performance.
generate higher profits than its “generic strategies” consist of two
rivals. As Jack Welch, CEO of US types of competitive advantage: cost
multinational General Electric and advantage and differentiation