StudentShare solutions
Triangle menu

Global Commodity Chain Model - Essay Example

Not dowloaded yet

Extract of sample
Global Commodity Chain Model

This has given rise to the concept of commodity chain. Different firms with heterogeneous geographical distribution engaged in production activities of a commodity is said to constitute a global commodity chain. This is known as the Global Commodity Chain (GCC) model. (Dicken P., 2003)
According to Hopkins and Wallerstein a commodity chain is defined as "a network of labor and production processes whose end result is a finished commodity". The process of production of a commodity is of main importance in the commodity chain. The entire process can be thought of being comprised of a network of points where each point is related to its preceding one in terms of procuring raw material, production, distribution and consumption. These interorganaisational points are technically defined as 'nodes'. The geographical location of the nodes is generally different from one another. This explanation provides an innovative view for explaining the global inequalities in development. The nodes that are located at the periphery of the network are open to more competition than the nodes at the centre. As a result, central nodes are subject to more aggregate wealth than the peripheral nodes. This distribution is augmented by competitive pressures of innovation that flows from the centre to the periphery. It is natural that the core areas will enjoy better support facilities like infrastructure than the peripheral area. (Birch K., April 2006)

The Value Chain Analysis developed by Michael Porter is an important tool in the hands of business managers that help to increase the value of the offering by a firm.. The generic value chain model suggests of breaking the entire set of activities undertaken by a firm into primary activities and support activities. The primary value chain activities include inbound logistics, operations, outbound logistics, marketing and after sales services. The support or secondary activities constitute of procurement of raw materials, research and development, human resources management and other firm activities. The value chain analysis guides the firm to concentrate on its core activities and maybe, outsource the rest. This maximizes the firm's competitive advantage and increase the profit margin by providing value to the customer in excess of costs. The different activities that constitute primary and secondary activities are interdependent and connected by linkages. Linkages occur when the process of any activity has an influence on the effectiveness of other activities. (Porter M.E., 1986)

The GCC model bears certain resemblances with Porter's value chain analysis. The generic value chain demonstrates how breaking up of activities helps a firm to attract increased productivity and profit. Since the industry is made up of firms related by similar lines of product, it can be stated that global firms need to manage the linkages in their commodity chain to ensure a winning hand over their competitors. (Dr. Jean-Paul Rodrigue, January 2009) However Porter is of the view that "lower-order" competitive advantage in the form of low cost labour is inferior to "higher order" competitive analysis in the form of innovation and constant up gradation of technology, customer relationship and brand image when deciding about global competitiveness. (Gereffi G. and Korzeniewicz M., 1994)

The market economy judges the efficiency of the management of any company in ...Show more

Summary

Topic: Using an extended example critically examine whether the 'sector matrix' framework gives a better strategic understanding of product markets than the concepts of 'product' or 'commodity' chains.
The present scenario of globalization has brought an interesting change to the way production of commodities has usually taken place…
Author : sean34
Global Commodity Chain Model essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Global Commodity Chain Model"
with a personal 20% discount.
Grab the best paper

Related Essays

Critical examination whether the sector matrix framework gives a better strategic understanding of product markets than the concepts of product or commodity chains
Critical examination whether the ‘sector matrix’ framework gives a better strategic understanding of product markets than the concepts of ‘product’ or ‘commodity’ chains The Business case approach will be focussing commodity value chain Jubilant Organosys which is a one of the largest custom research and manufacturing services companies in India.
8 pages (2000 words) Essay
Using an extended example critically examine whether the sector matrix framework gives a better strategic understanding of product markets than the concepts of product or commodity chains
The production of a single commodity might not remain confined to one particular country; it can be spread to a number of regions. Different components of a commodity can be produced in different countries
8 pages (2000 words) Essay
Enterprise Management
These moves have boomeranged now. Different divisions of the same company are facing problem for being based out in different countries (February Snowfall Cost British Airways £20m, April 2009) 2 February Snowfall Cost British Airways £20m,
8 pages (2000 words) Essay
Commodity chain
The use of plastic as raw materials could have been settled at due to the widely available forms of plastics in the market today. The raw materials could have been sourced
2 pages (500 words) Essay
Commodity chain
Reusable grocery bags can be made from several materials that includes biodegradable bags made from a starch-polyester (biopolymer) blend "Bags for life” made from low-density polyethylene (LDPE), heavier, more durable bags,
2 pages (500 words) Essay
3.Using an extended example critically discuss the view that a sector matrix gives a better strategic understanding of product markets than the concepts of product or commodity chains
These are; global commodities chain, the value chain, and the sector matrix theory (Haslam, Neale & Johal, 2000). These frameworks are important in the analysis
8 pages (2000 words) Essay
3.Using an extended example critically discuss the view that a sector matrix gives a better strategic understanding of product markets than the concepts of product or commodity chains
The two most popular models of analysing trends in the business environment are commodity chain analysis and sector matrix analysis. Due
8 pages (2000 words) Essay
Using an extended example critically discuss the view that a sector matrix gives a better strategic understanding of product markets than the concepts of product or commodity chains
The sector matrix often helps understand complex business activities and gives the organization a picture of how the market is looking. It is an incorporation of the Potter’s value chain as well as the commodity chain (Carbaugh, 2013). The sector matrix has the full
8 pages (2000 words) Essay
GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Therefore, EOQ can be defined as the model used in calculating the optimal quantity that can be produced or purchased to reduce the cost of processing purchase and carrying inventory. Price per unit is constant; the model assumes that the
4 pages (1000 words) Essay
Global supply chain analysis of P&G in the UK
The product manufactured by this consumer goods giant is sold in over 140 countries through the help of a robust supply chain network. The management of Procter and Gamble has emphasized a lot on implementing
15 pages (3750 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation