- Core Competancies: Those activities a firm does particularly better inside than out.
- Value Chain: Set of Activities an organization performs to create and distribute its goods and services. (finance, marketing, HR, purchasing, etc)
Along the way transaction costs add up both inside and out.
- Each Activity : adds value to the produce/service. This is "Margin".
- Competitive Advantage: is achieved when a firm links the activities in it's value chain either cheaper or better then it's competitors.
- In the Networked Economy you can't simply tinker with the value chain anymore, you have to alter it dramatically or destroy it all together (ie. Farmers who went into transportation business.)
- Many organizations: are preemptively destroying their own values chains because they see the changes comming (that will leave them in a commodity role or eliminate them altogether).
- More often: it is a startup or an organization from an entirely different industry that wil decide to destroy your value chain. [They have less vested interest in the "Old Model" and can inflict more damage much more quickly.]
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