LARGE VALUE ACTIVITY - a value activity which employs a significant fraction of operating costs or assets.

LATE MOVER ADVANTAGES - the advantage in not being first to market a new product or service. For example, avoiding high product development costs experienced by early movers.

LEARNING AND SPILLOVER - refers to working more efficiently because of increased knowledge and experience. Where spillover of learning among firms is high, the rate of learning may stem more from total industry learning than from the learning of one firm. Cost advantage results only from proprietary learning. [Source: M. Porter]

LINE OF BUSINESS - a general term which often refers to a set of one or more highly related products which service a particular customer transaction or business need. In some industries, like insurance, "line of business" also has a regulatory and accounting definition to mean a statutory set of insurance policies. It may or may not be a strategically relevant business unit or SBU.

LINKAGES - are the relationships between the way one value activity is performed and the cost or performance of another. See Value Chain Linkages; Supplier Linkages; Channel Linkages.

LIQUIDATION VALUE - the sale price of the business which takes into account the competitive position of the business, as well as the external industry and market forces.

LOCATION - affects the cost of an activity because of the costs associated with the specific location as well as the location relative to other value activities. [Source: M. Porter] Location is also a factor by which a firm can differentiate itself. 

LOGISTICS - See Inbound Logistics and Outbound Logistics. 

LOSS LEADERSHIP - a term commonly used to describe cross subsidization. Loss leader pricing is also a way of establishing a low price image.

LOWER CUSTOMER COSTS MEASUREMENT - a measure of the degree to which the product or service provided lowers customers' costs in performing an activity. (For scoring, use: Dramatically Lowers the Cost (5); Significantly Lowers the Cost (4); Moderately Lowers the Cost (3); Slightly Lowers the Cost (2); No Affect on Cost, or Raises the Customer's Cost (1).)

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Last modified:   Tuesday February 19, 2008