Using an Extended Example Critically Discuss the View That a ‘Sector Matrix’ Gives a Better Strategic Understanding of Product Markets Than the Concepts of ‘Product’ or ‘Commodity’ Chains.

2. Using an extended example critically discuss the view that a ‘sector matrix’ gives a better strategic understanding of product markets than the concepts of ‘product’ or ‘commodity’ chains.

INTRODUCTION

Throughout the past years, there has been greater research in analyzing globalization from a perspective of value chains (Gereff, 1999). These ‘value chains’ have since become of a greater significance and are used as analytical tools that are relevant in giving a better strategic understanding of the steadily growing product market.

Thus, this paper will highlight the relevance of using the chain concepts and the Sector Matrix approach to analyse and identify competitive advantages of product markets, as well as to critically discuss how the latter approach gives better understanding than the former mentioned.

It will begin with an overview and evaluation of the analytical tools used, mainly:

Porter’s Value Chain, Gereffi and Korzeniewicz’s Global Commodity Chain and the Sector Matrix approach conceptualized by Froud, et. al.

This will be followed by a sum up of the chain concept as whole, discussing the values and limitations as well a comparison with the Sector Matrix approach, in order to give rise to a critical discussion leading up to a conclusion at the end.

These discussions will also mainly reference specifically to the automobile industry and the Ford Motor Company (referred to as Ford).

VALUE CHAIN

“Every firm is a collection of activities that are performed to design, produce, market, deliver and support its product. All these activities can be described using a value chain…” (Porter, 1985: pp. 36)

The value chain is further defined as a basic tool for finding ways to create sustainable competitive advantage and to understand it (Porter, 1985).

In summary, the analysis of a value chain describes how a firm creates value through the identification of activities (business units) within, in relation to how it obtains...