Final answer:
Value-chain analysis is utilized to identify areas of specialization within the production process. The trend of splitting up the value chain leads to international trade of more specialized goods and fosters economic gains by enabling innovation and economies of scale.
Step-by-step explanation:
An important step in performing value-chain analysis is to use the value chain to identify areas of specialization and the division of production processes. Specialization has become increasingly refined within the world economy, leading to what is known as splitting up the value chain. This trend in international trade allows different firms to focus on specific stages of a product's creation, leading to a globalized production system where goods like automobile dashboards or refrigerator shelving are traded instead of complete finished products.
For example, the production of an iPhone involves multiple stages including designing and engineering in the United States, sourcing parts from Korea, assembly in China, and then advertising and marketing back in the United States. This division of labor across various countries and firms is facilitated by advancements in communication technology, information sharing, and transportation. By identifying each specialized link in the value chain, businesses can target areas for improvement, boosting efficiency, and fostering innovation within intra-industry trade.
Moreover, the segmentation of the value chain allows countries and companies to benefit from economies of scale and to enhance their capabilities in particular aspects of production, thereby broadening the concept of comparative advantage and contributing to economic gains.