Value? Business is about creating value. Value is the monetary worth of a product or asset. (Grant 2010: 35)

Transcription

1 Concept, creation, capture? Business is about creating value. is the monetary worth of a product or asset. (Grant 2010: 35) Strategy is the art of creating value. (Norman & Ramirez 1993:65) is what consumers are willing to pay. (Porter 1985:3) In competitive terms, value is the amount buyers are willing to pay for what a firm provides them. is measured by total revenue. (Porter 1985:38).. There is little consensus on what value creation is or how it should be understood. (Lepak et al 2007:180) Why so? Sid 4 Use value and exchange value (+ sign value) What did Porter say about value? = revenue! Sorry, not a complete picture! Revenue is the share of the value the firm gets in exchange for what is delivered. So, Price value Use value - Use-value is the qualitative aspect of value, i.e., the concrete way in which a thing meets human needs Exchange value Exchange-value is the quantitative aspect of value, as opposed to use-value which is the qualitative aspect of value, and constitutes the substratum of the price of a commodity. (Sign value relate to Baudrillard) (commodities are not merely to be characterized by use-value and exchange value, as in Marx's theory of the commodity, but sign-value the expression and mark of style, prestige, luxury, power, and so on becomes an increasingly important part of the commodity and consumption.) creation The mission of companies and other organizations. Not discussing much on the individual level. From what is value created? What is creating value? Sid 12 Sid 13

2 added acc. to Grant I A bit of pragmatic economics (Grant 2010:35) p S Assumptions Market in equilibrium A static view Sales revenue = (X ) (monetary) What customers/ consumers pay added Retained earnings Dividends Taxes Royalties Rent Interest Wages/salaries p 1 D q Exchange value - price (p 1 ) Use value? Indicated by the demand curve. Consumer surplus! Now, is this all there is to value? Material input 0 Sid 15 Sid 24 creation Company and consumer Unit cost economies / increasing returns to scale Firm level infrastructure and strategy Potential value creation Resources (mainly human) and the services they provide The consumer has normallly been neglected. Production/manufacturing positive, consumption negative. Consummate to complete. Normann & Ramirez the consumer is creating value. The company is the central star in a constellation of services, goods (68) Technology and innovativeness Source: Pitelis 2009:1124 Sid 28 Sid 29

3 The role of the consumer Todays consumer Determines the value, yes. Do the consumer create value? Yes. Ex the chanterelle vase. When is the value created? What is important for the value creation? Is consumption a value creating activity? Consume? To waste away, expend, destroy? To utilise an economic good in the process of production, to accomplish, to complete. We are witnessing a move from value as objective to value as (inter) subjective, that is, value is co-produced. (Ramirez 1995). Norman & Ramirez develop this view. Sid 31 Sid 32 The process of and causal pathway of value creation and capture (Pitelis 2009) Generic determinants of value creation Sale of product or service, realized value Agents conjectured value-creating advantages and action potential Firm-organization Organizational value capture strategies and vehicles Competition and cooperation, market and value co-creation Their choice is to sell the advantage or capability in the market, or to create an organization that allows them to build the product or service and then sell it to users. (Pitelis 2009:1128) Sid 34 Sid 36

4 added acc. to Grant II (Grant 2010:35) Sales revenue = (X ) (monetary) Retained earnings Stays with the firm What customers/ consumers pay added Cost Dividends Taxes Royalties Rent Interest Wages/salaries Shareholders Government Rights owners Landlords Lenders Staff 0 Material input Suppliers of material goods Source: Grant 2010:46 Sid 37 Sid 38 A fairly recent definition:? is perceived worthiness of a subject matter to a socioeconomic agent that is exposed to and/or can make use of the subject matter. (Pitelis 2009:1118) Perceived! Socio-economic? Please observe, Pitelis definition does not refer to willingness to pay. E.g intrinsic values? Sid 39 Sid 43

5 References Grant, R. M. (2010). Contemporary Strategy Analysis (7 ed.). Chichester: John Wiley & Sons Ltd. Normann, R. and Ramirez, R. (1993). From value chain to value constellation - designing interactive strategy. Harvard Business Review, 71(4): Lepak, D. P., Smith, K. G. and Taylor, M. S. (2007). creation and value capture: A multilevel perspective. Academy of Management Review, 32(1): Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Competitive Advantage. New York: The Free Press. Pitelis, C. N. (2009). The Co-Evolution of Organizational Capture, Creation and Sustainable Advantage. Organization Studies, 30(10): Sid 46