Agenda. What is a value chain? Meaning and use of value chain analysis Value chain global strategy

Transcription

1 Global Value Chains

2 Agenda What is a value chain? Meaning and use of value chain analysis Value chain global strategy

3 Readings Kaplinsky, R. and Morris, M. (2001). A Handbook for Value Chain Research. Institute of Development Studies, Brighton. Selected pages: 4-10; Gereffi, G., Humphrey, J. and Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy 12(1):

4 ipod economics

5 Inside an ipod Model: Ipod 5th generation, 30 GB (Video Ipod) Final price: 299$

6 Decomposing the product

7 Key components Fonte: Linden et al., 2007

8 Value distribution 299$ $ = $ Distributor Apple Retailer

9 A complex geography

10 What is a value chain? Design Components Assembly Distribution Retail Flow of inputs and information Competitive advantage can t be understood by looking at a firm as a whole. It stems from the many discrete activities a firm perform in designing, marketing, delivering and supporting its production. (Michael Porter, 1985)

11 What can we gain from a VC analysis? VC analysis ü Value chain analysis plays a key role in understanding systemic competitiveness ü The analysis and identification of core competences will lead the firm to outsource those functions where it has no distinctive competences (core business) ü Mapping the flow of inputs in the production chain allows each firm to determine who else s behavior plays an important role in its success

12 Value chain global strategy In the global reconfiguration of the firm, managers should retain in-house those activities in which the company has its distinctive capabilities.. and should outsource to external partners the peripheral, non-core activities The disaggregation and dispersion of the firm also entails more complexity and more costs in terms of added management and communication efforts

13 Value chain global strategy The main task of a global strategy is to determine the optimal level of disaggregation of the firm s operations over its entire value chain and decide the optimal global allocation of each piece In a dynamic sense, the building of a global network of disaggregated and dispersed value chain activities is ìa learning process

14 Factors of complexity 1. The interface or coordination costs increase with geographical and organizational distance 2. Each relocation involves additional search costs i.e. searching for external vendors, searching in unfamiliar foreign locations 3. The greater the number of discrete slices into which the firm s value chain is divided, the greater the complexity and overall coordination overheads

15 The smile curve

16 The GVCs model The global value chain framework focuses on the nature and content of inter-firm linkages, and the power that regulates value chain coordination. (Gereffi, et al 2005: 98)

17 The GVCs model

18 How do we manage complexity? The interaction of 3 transaction variables complexity of transactions, ability to codify transactions, suppliers capabilities determines 5 types of governance

19 Market Low complexity of information exchanged Transactions are codified Suppliers have the capability to replicate the products Transactions are managed with little explicit coordination

20 Hierarchy High complexity of products Product specification can not be codified Suppliers capabilities are not found Hierarchy; activities are internalized

21 Captive High complexity of products High ability to codify transactions Low suppliers capabilities Captive relationships; suppliers are dependent on the lead firm for complementary activities (e.g. design, logistic)

22 Modular Complexity of products increases Codified knowledge (process specification) Exchange of information is not limited to prices The degree of explicit coordination tends to increase

23 Relational Transactions are complex Product specifications can not be codified High suppliers capabilities High level of explicit coordination; Mutual dependence can be regulated through reputation, social and spacial proximity

24 The GVCs model Determinants of global value chains governance

25 The GVCs model: Upgrading Upgrading at the firm level has been related to capability development. It refers to deepening the firm s capabilities in the same functions or in additional functions along the value chain The upgrading construct can be correlated to the concept of dynamic capabilities (Teece & Pisano, 1994), thus describing how a firm evolves over time in the attempt to improve its competitiveness

26 Social issues

27 Reshoring