Does the Sector Matrix Framework Give a Better Strategic Understanding of Product Markets Than the Concepts of Product or Commodity Chains.

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According to Hopkins and Wallerstein, a commodity chain is defined as “a network of labor and production processes whose end result is a finished commodity”. The process of production of a commodity is of main importance in the commodity chain. The entire process can be thought of as being comprised of a network of points where each point is related to its preceding one in terms of procuring raw material, production, distribution, and consumption. These inter-organizational points are technically defined as ‘nodes’. The geographical location of the nodes is generally different from one another. This explanation provides an innovative view for explaining the global inequalities in development. The nodes that are located at the periphery of the network are open to more competition than the nodes at the center. As a result, central nodes are subject to more aggregate wealth than the peripheral nodes. This distribution is augmented by competitive pressures of innovation that flow from the center to the periphery. It is natural that the core areas will enjoy better support facilities like infrastructure than the peripheral area.

The Value Chain Analysis developed by Michael Porter is an important tool in the hands of business managers that help to increase the value of the offering by a firm. The generic value chain model suggests breaking the entire set of activities undertaken by a firm into primary activities and support activities. The primary value chain activities include inbound logistics, operations, outbound logistics, marketing, and after-sales services. The support or secondary activities constitute of procurement of raw materials, research and development, human resources management and other firm activities. The value chain analysis guides the firm to concentrate on its core activities and maybe, outsource the rest. This maximizes the firm’s competitive advantage and increases the profit margin by providing value to the customer in excess of costs. The different activities that constitute primary and secondary activities are interdependent and connected by linkages.&nbsp.

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