Idea 47 - Value chain Michael Porter, who has given management more big ideas than anyone since Peter Drucker, is unyielding on the subject of being competitive. If a company wants competitive advantage, he insists, it must examine every little thing it does through the prism of competitiveness. His five forces model was a tool for assessing the strength of competition outside the factory gate. To help analyse a firm's internal· competitiveness, he developed his concept of the value chain. Porter saw all the interrelated activities that create a product or a service as links in a rather complex chain. Each has a cost, and each adds value to the end product. The firm wants to sell the end product to the customer at a price - an aggregated level of value - that exceeds the sum of the costs. The difference will be its profit margin. To maximize that difference, Porter urged companies to analyse the competitiveness of each link in the chain. He divided the firm'...