An important concept that highlights the role of
information technology in competition is the “value
chain.”1 This concept divides a company’s activities
into the technologically and economically distinct
activities it performs to do business. We call these
“value activities.” The value a company creates is
measured by the amount that buyers are willing to
pay for a product or service. A business is profitable
if the value it creates exceeds the cost of performing
the value activities. To gain competitive advantage
over its rivals, a company must either perform these
activities at a lower cost or perform them in a way
that leads to differentiation and a premium price
(more value).2