Augmenting the Value Chain: Identifying Competitive Advantage via the Internet

Abstract

With the growth and importance of electronic commerce, research concerning the Internet has intensified. Organizations are increasingly seeking to maximize competitive advantage by exploiting the opportunities afforded by the World Wide Web. Although the search for strategies that foster competitive advantage are frequently based on Porter's (1985) value chain model, this paper conceptualizes an augmented value chain that identifies the Internet as a new business channel. This extension is founded upon the literature demonstrating that the Internet is sophisticated enough to warrant specific inclusion in a holistic 'Business Activity Model'. The work of Rayport and Sviokla (1996), Bickerton, Bickerton and Simpson-Holley (1998), and Sethi and King (1994) can provide conceptual additions to the value chain in order to sufficiently encompass the impact of the Internet. A synthesis of this work has been employed to construct a speculative, augmented value chain - the Business Activity Model. This paper argues that the Internet needs to be considered as more than a collection of constituent applications and that it is not adequately represented in the value chain. It also identifies a potential instrument to augment the value chain and shows how their integration can create a useful tool for considering competitive advantage.

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