Sector Matrix Framework - Essay Example

This paper aims to evaluate “Sector Matrix Framework” for its usefulness in analyzing demand and supply linkage. This evaluation will compare Froud’s Sector Matrix Framework with Porter Value Chain concept and Gereffi’s Global Commodity Chain Framework. Value Chain Approach Concept Michael Porter in his 1985 book “Competitive Advantage: Creating and Sustaining Superior Performance” gave the management concept of the value chain. A value chain is a firm’s chain of activities to produce its output.

It focuses on the organization’s process view. Porter classified the hundreds of activity of converting input in to output in two categories. Particularly, primary activities, which include “inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service” (Porter, 1998). These activities are “Involved in the physical creation of the product and it sale and transfer to the buyer as well as after sales assistance” (Porter, 1998). The other category is of Support activities, which includes “Procurement, Human Resource management, Technological Development, and Infrastructure” (Porter, 1998). . Porter believes that a firm to achieve competitive advantage should focus on its discrete activities in “designing, producing, marketing, delivering, and supporting its products” (Porter, 1998, p.33). That is why he introduced value chain as a valuable tool for systematically analysing these activities.

Analysis of Demand and Supply Porter value chain approach analyse demand and supply on the bases of value adding procedure and the industry structure. Porter believed that the interdependent processes of the value chain adds value to the product and, as a result, finally generate demand. He was further of the believe that as value chain delivers value to the customer with firms obtaining competitive advantage for the production of the product it helps to determine the supply (Sople, 2012, pp. 37-41). According to Porter, the demand and supply balance is very much dependent upon the structure of the industry.

As the industry structure plays a vital role in determining an organizations profit, it has a significant role in achieving and maintains demand and supply balance of a product. Evaluation Although, chain concept is one of the most applicable and successful concept for achieving competitive advantage it is not without drawbacks. Chain concept is not of much help for a diversified firm operationally defined as one sells related and unrelated products thus compete in different industries. It works for commodities, which do not need infrastructure and complementary services before there usage.

The chain value analysis of Ford would evaluate that the company due it to it being involved in more than one generic strategy suffers from lack of competitive advantage and exhibits below average performance. There may be some