A smiling curve is an illustration of value-adding potentials of different components of the value chain

Value chain

The value chain, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.-Firm Level:...

 in an IT-related manufacturing industry. The concept was first proposed by Stan Shih

Stan Shih

Stan Shih is a retired Taiwanese business tycoon...

, the founder of Acer, an IT company headquartered in Taiwan

Taiwan

Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...

, around 1992. According to Shih's observation, in the personal computer industry, both ends of the value chain command higher values added to the product than the middle part of the value chain. If this phenomenon is presented in a graph with a Y-axis for value-added and an X-axis for value chain (stage of production), the resulting curve appears like a "smile".

Based on this, ACER has adopted a business strategy to recreate itself from a manufacturer into a company that focuses on global marketing of brand-name PC-related products and services. Meanwhile, ACER also has invested aggressively in R&D to develop innovative technology. The concept later became widely cited to describe the distribution of value-adding potentials in various industries to justify business strategies aimed at higher value-adding activities.

See also

• Smiley face curve
  Smiley face curve
  A smiley face curve in audio signal processing, is a target frequency response curve characterized by boosted low and high frequencies coupled with reduced midrange frequency power...
  
  , in professional audio, a graphic equalizer setting that reduces midrange tones