terms its 'value system', but which might be more usefully referred to as the 'industry value-chain'. This includes suppliers and distribution channels. Exhibit 5 reproduces Porter's representation. Competitive advantage is a function of how well a company can manage the entire industry value-chain. A corporation can create competitive advantage by co-ordinating its links in that chain. Exhibit 5: Porter's Industry Value-Chain(Porter 1980) An enterprise's activities are subject to influence from: new technologies. These may alter the path of the value chain, eg. the invention of semiconductors forced many vacuum-tube producers out of business, and the printing and publishing industries are currently confronted by a major upheaval; new or shifting buyer needs. Customers are demanding the convenience and consistency offered by fast-food chains. This in turn influences related market segments; change in industry segmentation. The disappearance of old intermediaries and the emergence of new ones creates the potential to substantially reconfigure the value chain. Enterprises that fail to adjust will be forced out; shifts in the costs or availability of factors of production. Competitive advantage can be gained by optimising based on current conditions. On the other hand, enterprises saddled with assets and approaches tailored to outdated modes of operation suffer; change in government regulations. Changes in product standards, environmental controls, restrictions on entry to the market, and trade barriers all affect an enterprise's performance. Several developments in several different business disciplines have been associated with the value-chain concept. Activity-based costing (ABC - Johnson & Kaplan 1987) is one. Another is business process redesign / business process reengineering (Hammer 1990, Hammer & Champy 1993). Key Elements of the Theory As is commonly the case with emergent areas of study, conventional empirical research was not...
