the pc industry’s profit pool

THE PC INDUSTRY’S PROFIT POOL

40%

30

20

10

0

0 100%

Share of Industry Revenue

opera

ting m

arg

in

microprocessors

other componentspersonal computers

software

peripherals

services

The value chain for the PC industry includes six key activities; the profitability of the activities varies widely. Manufacturers compete in the largest but least-profitable segment of the chain.

source: Harvard Business Review, May-June 1998

THE U.S. AUTO INDUSTRY’S PROFIT POOL

25%

15

10

5

0

0100%

Share of Industry Revenue

opera

ting m

arg

in

auto manufacturing

new car dealersused car dealers

auto loans

auto insurance

aftermarket partssource: Harvard Business Review, May-June 1998

20

leasing

warranty

gasolineservice repair

auto rental

The automotive industry encompasses many value-chain activities. The way that profits and revenues are distributed among these activities varies greatly. The most profitable areas of the car business are not the ones that generate the biggest revenues.

Profit Pools: Company Examples

Companies

Automakers

U-Haul

Elevators (OTIS)

Iomega

Polaroid

Core Business

Auto manufacturing

Truck Rental

Elevator Manufacturing

Zip Drives

Instant Photography Cameras

Sources of Highest ROI

Leasing, insurance, service.

Packing materials, storage

Service

Zip Disks; Storage

Film