Using an extended example critically examine whether the sector matrix Essay

Using an extended example critically examine whether the sector matrix framework gives a better strategic understanding of product markets than the concepts of product or commodity chains - Essay Example This has given rise to the concept of commodity chain. Different firms with heterogeneous geographical distribution engaged in production activities of a commodity is said to constitute a global commodity chain. This is known as the Global Commodity Chain (GCC) model. (Dicken P., 2003) According to Hopkins and Wallerstein a commodity chain is defined as â€Å"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 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 interorganaisational 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 centre. As a result, central nodes are subject to more aggregate wealth than the peripheral nodes. This distribution is augmented by competitive pressures of innovat ion that flows from the centre to the periphery. It is natural that the core areas will enjoy better support facilities like infrastructure than the peripheral area. (Birch K., April 2006) 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 of 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