2. THE PC INDUSTRY’S PROFIT POOL 40% 30 20 10 0 0 100% Share of Industry Revenue operating margin microprocessors other components personal 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

3. THE U.S. AUTO INDUSTRY’S PROFIT POOL 25% 15 10 5 0 0 100% Share of Industry Revenue operating margin auto manufacturing new car dealers used car dealers auto loans auto insurance aftermarket parts source: Harvard Business Review, May-June 1998 20 leasing warranty gasoline service 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.

4. 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