• Coined by Clayton Christensen of Harvard Business School.
  • According to it, the total profit along an industry value chain does not change but profit moves along the value chain.
  • As technology and markets change, few parts of the value chain become more attractive and others less attractive over time.
  • A sweet spot on the value chain is a place where there is still scope to improve the performance of the product or service, differentiate it from competitors and charge a premium.