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The battle of the value chains: new specialized versus old hybrids

The battle of the value chains: new specialized versus old hybrids Purpose – The paper aims to identify examples of the challenges posed to established firms in various industries as new fronts of specialization emerge. Design/methodology/approach – The paper proposes a practical approach for discovering where firms are likely to be effectively attacked by emerging rivals with specialized value chains, and for developing both preemptive first strikes and successful counterattacks. Findings – The paper finds that the shift toward specialization – driven by globalization, buying via the Internet, modular value chains, and the growth of low‐wage economies – is playing out faster than some big companies can adapt. Especially at risk are companies that continue to view their customers in terms of unique buying segments, instead of realizing that today the same customer may demand different varieties of a product or service at different times. A.T. Kearney found that evaluating which segments of specific customer needs would gain from value chain specialization requires comprehensive analysis. Practical implications – Increasingly, industry‐leading companies find that they must develop a number of specialized value chains to meet their customers' demand for different varieties of a product or service at different times. Originality/value – A.T. Kearney research and experience contradicts the conventional wisdom that established firms are more competitive if they continued to adjust and augment a single value chain. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategy & Leadership Emerald Publishing

The battle of the value chains: new specialized versus old hybrids

Gillis Jonk; Martin Handschuh; Sandra Niewiem
Strategy & Leadership , Volume 36 (2): 6 – Mar 7, 2008
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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1087-8572
DOI
10.1108/10878570810858185
Publisher site
See Article on Publisher Site

Abstract

Purpose – The paper aims to identify examples of the challenges posed to established firms in various industries as new fronts of specialization emerge. Design/methodology/approach – The paper proposes a practical approach for discovering where firms are likely to be effectively attacked by emerging rivals with specialized value chains, and for developing both preemptive first strikes and successful counterattacks. Findings – The paper finds that the shift toward specialization – driven by globalization, buying via the Internet, modular value chains, and the growth of low‐wage economies – is playing out faster than some big companies can adapt. Especially at risk are companies that continue to view their customers in terms of unique buying segments, instead of realizing that today the same customer may demand different varieties of a product or service at different times. A.T. Kearney found that evaluating which segments of specific customer needs would gain from value chain specialization requires comprehensive analysis. Practical implications – Increasingly, industry‐leading companies find that they must develop a number of specialized value chains to meet their customers' demand for different varieties of a product or service at different times. Originality/value – A.T. Kearney research and experience contradicts the conventional wisdom that established firms are more competitive if they continued to adjust and augment a single value chain.

Journal

Strategy & Leadership – Emerald Publishing

Published: Mar 7, 2008

Keywords: Competitive strategy; Market segmentation

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