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The battle of the value chains: new specialized versus old hybrids

Gillis Jonk (Partner in the A.T. Kearney's strategy practice and chair of the firm's Knowledge and Innovation Council, is based in Amsterdam (gillis.jonk@atkearney.com).)
Martin Handschuh (Principal in A.T. Kearney's growth strategies practice (martin.handschuh@atkearney.com))
Sandra Niewiem (Manager in the firm's growth strategies practice, are both based in Frankfurt, (sandra.niewiem@atkearney.com))

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 7 March 2008

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Abstract

Purpose

The paper aims to identify examples of the challenges posed to established firms in various industries as new fronts of specialization emerge.

Design/methodology/approach

The paper proposes a practical approach for discovering where firms are likely to be effectively attacked by emerging rivals with specialized value chains, and for developing both preemptive first strikes and successful counterattacks.

Findings

The paper finds that the shift toward specialization – driven by globalization, buying via the Internet, modular value chains, and the growth of low‐wage economies – is playing out faster than some big companies can adapt. Especially at risk are companies that continue to view their customers in terms of unique buying segments, instead of realizing that today the same customer may demand different varieties of a product or service at different times. A.T. Kearney found that evaluating which segments of specific customer needs would gain from value chain specialization requires comprehensive analysis.

Practical implications

Increasingly, industry‐leading companies find that they must develop a number of specialized value chains to meet their customers' demand for different varieties of a product or service at different times.

Originality/value

A.T. Kearney research and experience contradicts the conventional wisdom that established firms are more competitive if they continued to adjust and augment a single value chain.

Keywords

Citation

Jonk, G., Handschuh, M. and Niewiem, S. (2008), "The battle of the value chains: new specialized versus old hybrids", Strategy & Leadership, Vol. 36 No. 2, pp. 24-29. https://doi.org/10.1108/10878570810858185

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited