Clayton Christensen,whose ideas you will meet next week during our class on Disruptive innovations, talks about a law, the law of conservation of attractive profits.Formally, the law of conservation...

Clayton Christensen,whose ideas you will meet next week during our

class on Disruptive innovations, talks about a law, the law of conservation of attractive profits.Formally, the law of conservation of attractive profits states that in the value chain there is a requisite juxtaposition of modular and interdependent architectures, and of reciprocal processes of commoditization and de-commoditization, commoditization, that exists in order to optimize the performance of what is not good enough. The law states that when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.Since it is a "law"; on reflection it is actually obvious, quite a commonplace observation. Your task is to use the language of our course (or its many concepts) to make a case for its "obviousness". Also reflect on what implication it has for a firm as it plots its strategic maneuvers to maximize its profits. Are there cases when this law might hold (after all it is the law), but may not show up in the numbers posted by firms in a vertical chain.Note: The phrase "value chain" is used here to mean a "vertical chain" in our vocabulary. That again is obvious; just a switch in perspective- a collection of activities chain linked to create a product can be seen from the perspective of a single firm (Porter's Value Chain) or it could encompass firms linked together in supplier-customer relationships to produce a product (Vertical Chain).