Value chain management : a model for co-operation or a conflict?

Industry-level value chain analysis is an effective way to identify the interplay between different players in any specific industry. It helps identify the resources required successfully to compete in an industry and where individual organisations should locate within that industry to maximise their “returns” and those of the value chain. It is also potentially a useful method for describing the processes and activities within and around an organisation and relating them to an analysis of the organisation’s competitive strengths and weaknesses. (Lindgren and Banhold: 2003). While the value chain is becoming more widely accepted as a planning and management model much remains to be done concerning performance management and the issues this presents for inter-organisational relationships. If a value chain only operates based on altruistic cooperation between players, the model is clearly flawed. Rather it is suggested that value chain analysis not only charts optimum strategic options for a firm, but also highlights its perils. There are clear examples where the working capital requirements of the dominant member of a chain are funded at the expense of the minor players. This should not only suggest how the participants in that chain need to order their own business models and react in a strategic sense to other value chain participants, but also highlight the potential fragility of the chain as a whole. This paper explores some of these inter-organisational issues drawing on examples from retailing in particular. It should be added that the paper is largely an attempt at identifying current and future issues that will need to be resolved if the value chain model is to deliver its full potential