nternal processes become adapted to the beneficial peculiarities of the particular factor of production, and use of an alternative would force internal changes. Hence product differentiation also serves as an entry barrier. In addition, a continuous process of product differentiation may produce an additional cost advantage over competitors and potential entrants, through intellectual property protections, such as patents, and the cost of imitation. The activities performed by a particular enterprise can be analysed into primary activities, which directly add value to the enterprise's factors of production, which are together referred to as the 'value chain', and supporting activities. Exhibit 4 reproduces Porter's diagram. Exhibit 4: Porter's Enterprise Value-Chain(Porter 1980) The primary, value-adding activities include those involved in the production, marketing delivery, and servicing of the product. They are linked, generally in a chain. Support activities include those providing purchased inputs, technology, human resources, or overall infrastructure functions to support the primary activities. By co-ordinating linked activities, an enterprise should be able to reduce transaction costs, gather better information for control purposes, and substitute less costly operations in one activity for more costly ones elsewhere. Co-ordinating linked activities is also an important way to reduce the combined time required to perform them. Hence co-ordination is increasingly important to competitive advantage. Gaining competitive advantage requires that an enterprise's value chain be managed as a system rather than as a collection of separate parts. Reconfiguring the value chain, by re-locating, re-ordering, re-grouping, or even eliminating activities is often at the root of a major improvement in competitive position. An enterprise's value chain for competing in a particular industry is embedded in a larger stream of activities that Porter ...
