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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (12949)	12/18/1999 2:09:00 PM
From: mauser96	Read Replies (1) of 54805

Value chains are probably over simplified in the book. Let's use 2 examples 1) Use of a word processor by a small company. They are unlikely to take the trouble to change, and even if something happens to the software firm providing the word processor they will get by OK, because they still have the software. 2) Company A making cell phones using a chip available only from company X. Company X's factory is located in California right on the San Andeas fault. It is in company A's interest to support company X, but it is even more in their interest to get second sourcing of the chip. Otherwise they are risking their entire company on a whim of nature. So the type of value chain that is formed depends on lots of different factors. It isn't necessary that the second source company be powerful or even very successful, just that it be there when needed. Software value chains don't need second sourcing as much as hardware value chains, which may be another reason gorillas tend to cluster in the software space.

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