STRATEGIC MANAGEMENT

'Sector Matrix' Framework: A Useful Tool for Analysing Demand and Supply Linkages in an Automobile Industry

'Sector Matrix' Framework: A Useful Tool for Analysing Demand and Supply Linkages in an Automobile Industry

Introduction

Prior a decade ago from the current era, the competitive focus of industries was on the production process of product. They presumed strategies develop for a product design as their principal activity. However, at the present time, products services and commodities are growing day by day because of increasing demand of customers and their active lifestyle. This tremendous change has brought unique and more innovative ways of analysing business strategies and its framework. One major and useful tool for analysing business economics is 'sector matrix' framework.' This notion was established by Froud, Haslam, Johal and Williams (1998) known as “sector matrix.” In this essay, we are examining and analysing that whether a value chain approach is adequate for organisations and usefulness of a sector matrix to a firm engaged in a more intricate framework. The main focus will be particularly on the car industry.

Discussion

An approach of sector matrix framework “de-emphasises the organisation of production and instead separately analyses the two webs of demand and supply relationship” (Froud, et.al, 1998). In this context of demand and supply relationship, value chain is a significant approach. The way in which several firms connect to drift into multiple activities; the societal and institutional perspective allows them to function and comprehend the causes of drifting in some sectors and not in the others. This drift of firms can be better understood by Porter's model of value chain. Porter says:

“Competitive advantage cannot be comprehended by viewing at an organisation as a whole. It seems from a number of distinct activities an organisation functions in designing, marketing, producing, delivering and promoting its product. Each of these activities can add demarcation.”

An organisation's productivity and profitability not merely though industry situations, however also through the quantity of worth it creates in relation to its competitors. A company can attain competitive advantage, if it has abilities, which facilitate it to build not merely optimistic value but also added overall value relative to its competitors. By comprehending the purpose of a firm to create value and continuing the same in the future is an initial important step in identifying a company's prospective for accomplishing a competitive advantage in the market place. Thus, a company should comprehend how its services and products fulfils consumer demands and needs better relative prospective alternatives; sales and distribution, the technology of production, and the business's costs (Stone, 2011).

Theory of and Purpose Porter's Value Chain Model

Porter established the notion of value chain as the fundamental tool for investigating the activities an organisation executes and their relations with an opinion to classifying the resources of sustainable competitive advantage. It segregates the activities of an organisation into chronological flow of activities and is utilized to examine and institute the significance of the multiple activities in distributing the finished service / product, thus supporting the classification ...