Overview[ edit ] To use the chart, analysts plot a scatter graph to rank the business units or products on the basis of their relative market shares and growth rates.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Get Access Strategic Management: Sector Matrix Framework vs. Commodity Chain Analysis Essay Sample Extinction of the linear value chain as a means of analyzing the product market is becoming seemingly necessary with the global rise and expansion of industries and sectors.
Demand and supply relations are constantly interfering with each other hence disregarding use of commodity chains as an effective way to understand the market demand. Understanding the product market is a challenge that cannot be overlooked because every business relies on the market for its profitability.
The management has a task to integrate the factors of production so as to profit from the business through reduction of costs while maintaining quality to improve customer base.
This implies that market is likely to be similar for these goods and therefore the concept of value added is appropriate for studying the product market Porter, Haslan and Neale According to Cohen According to Haslan and Neale The supply chain analysis leads to strategic decisions and policies of re-organizing the chain to give the firm a competitive advantage over other firms.
In other words, the commodity chain bases its choice for business strategy only on the best value chain. The commodity chain analysis limits the businesses to using the linear supply chain and confides their analysis within the sector or across the industry.
The sector matrix on the other hand provides a better strategy for the product market because it deviates form the traditional supply chain analysis taking into consideration other sectors in the economy.
The sector matrix is defined by Froud et al Sector matrix vs value chain and aims at analyzing how one sector as part of the economy interacts with other sectors and how market forces not part of demand and supply affect business.
It must be noted however that the firm will still aim at minimizing costs and maximizing sales. When it comes to using the sector matrix, the business aims not only on concentrating on the sector from which they solicit their profits and incomes but on the entire economy as a whole.
Instead of analyzing demand from the individual market, we take the whole household as a consumption unit. As we will realize, household expenditure is limited by how their priorities are set and the income constraint.
Decisions can no longer be based on individual customers as they are highly influenced by family decisions. In addition, factors influencing demand vary from household to household and are influenced by the amount of disposable income available to them Cohen, In order to explain the dichotomy existing between commodity supply chains and sector matrix and which of the two methods best analyzes the product market, we are going to take the example of the motoring sector.
At the end ofBusiness Week magazine reported a slumping demand for motor vehicles with many companies reporting excess supply as the market demand was not enough to take up all the vehicles produced Jim Major auto companies such as Ford, Chrysler, Toyota, Mazda among others have set to analyze the market to establish the cause of the demand in the past Whisler, Toyota is a Japanese firm which over the years has penetrated the American market giving substantial competition to the big three; Chrysler, Ford and General Motors.
Alarmed at the rate at which demand for motor vehicles has been declining despite the introduction of new models, Toyota set out to conduct a market survey in America to help it in channeling its strategies to fit the market.
According to Porter, Toyota could evaluate the commodity chain in a bid to re-organize its use of factors of production to reduce the costs and subsequently win the market over its competitors through lower prices.
This is analyzing the product market from the commodity supply chain. Use of the commodity chain strategy would mean reducing costs through supply substitution and reduction in the costs of labour to offer a competitive edge. The supply chain according to porter would help Toyota to improve on its production of newer models that would beat its competitors which is a good idea.
Decisions taken using the supply chain however may not reflect the actual situation at the market and the reforms may not change the situation much. Policies taken to reduce the cost of labour can take time to be implemented and may end up having limited benefits since the costs may eventually be passed on to the final consumer Haslan and Neale Below is a representation of the supply chain for Toyota ltd.
The use of supply chain to assess a sector however has proved to be limiting as it concentrates so much on the supply side leaving out or analyzing very little on the demand side.
Vertical linkages which form the connections between suppliers and the final distributors or manufacturers are highly emphasized in commodity chain analysis.
Horizontal linkages on the demand side however show that the competition is determined by the firms in the sector which is not very exhaustive.
The sector matrix brings in a more detailed analysis of the market because apart from looking at the supply chain of the given sector, it incorporates the sector in a whole market economy scenario.This solution addresses the elements of chain and matrix analysis in words.
Please note that there are a few gaps in the question. First, the sector matrix analysis is different from the chain matrix analysis but they are interrelated. Value chain analysis (VCA) is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation.
Premium access to exclusive online content, companion digital editions, magazine issues and email newsletters. Subscribe Now. Become a PLUS+ subscriber and you'll get access to all Supply Chain Management Review premium content including.
Full Web Access. The growth–share matrix (aka the product portfolio matrix, Boston Box, BCG-matrix, Boston matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that was created by Bruce D.
Henderson for the Boston Consulting Group in to help corporations to analyze their business units, that is, their product ashio-midori.com helps the company allocate resources and is used as an analytical.
GCEL presents an innovative global economic development program by Empowering the Digital Economy that aims to build the buying power of the mid and low income countries creating new demand for the high-income countries towards achieving sustainable economic growth.
Value Chain And Commodity Chain. We also have a wide variety of research papers and book reports available to you for free.
You can browse our collection of term papers or use our search engine.