Source: Adapted from the Stan Shih “Smile Curve” concept.

Commodity Chains and Added Value

The manufacturing function of many corporations has been hollowed out by the process of globalization, in which manufacturing accounts for one of the least added value activity, particularly if it takes place within a subcontracting framework. In a global economy and globalized consumption market an important share of the added value of a product concerns the R&D, branding and design on the concept segment (creating a product). On the logistics segment (making a specified product available on markets), distribution, marketing and sales / after sales services (such as customer support) are the activities generating the most added value.

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