S8 - VALUE CREATION

Question 1

What are the main takeaways of What Is the Theory of Your Firm by Todd Zenger?

Answer 1

1. Strategy should be guided by a corporate theory, not just competitive positioning
   - Traditional strategy focuses on defending a market position, but investors reward companies that continually create new value. A robust corporate theory explains how a firm uniquely combines assets and capabilities to do this.
   - It pays to invest a lot of time/energy in crafting a robust theory that is quite specific as to how combinations of assets create value
2. A good corporate theory requires three “sights”
   - Foresight: Insight into how the industry and customer preferences will evolve, future.
   - Insight: Deep understanding of the company’s unique capabilities and assets.
   - Cross-sight: Ability to identify valuable combinations between internal strengths and external opportunities.
3. Success depends on acting in line with this theory—and failure often comes from straying from it
   - An effective corporate theory is company specific; it identifies those assets and activities that are rare, distinctive, and valuable

Question 2

What is salespeople’s main key to success?

Answer 2

Creating customer value
Value > Price

Question 3

How is value evaluated (arbre)?

Answer 3

Value

1. Benefits
   - Core benefits: features
   - Sourcing benefits: everything that is exchanged during the buying process
   - Operating benefits: Benefit you get when using it
2. Costs
   - Direct costs
   - Acquisition costs
   - Operation costs

Question 4

What is value?

Answer 4

The link between:
- Personal perception
- Value-in-use: utility, contribution to someone’s goals
- Value-in-exchange: power of purchasing other goods, reflected in market price
- Market Price
- Profit over time

Question 5

What is required to build competitive advantage in business development?

Answer 5

1. Creation of Customer value (ex.: effective supplier-customer relationship)
   - Influences the potential magnitude of the advantage
2. Appropriation of Value in the Marketplace
   - Influences the amount of the advantage the firm can capture
   - Influences the length of the time the advantage persists

Question 6

What are the four aspects regularly involved in creation and capturing value in customer relationships?

Answer 6

Value for the supplier is determined by:

1. Complementary resources
2. Relation-specific assets
3. Knowledge-sharing routines
4. Effective governance

Question 7

Describe the basic value creation process

Answer 7

1. Value discovery
   - Activities to identify potential value
2. Conceived value
   - Generated ideas on how to add value
3. Realized value
   - Actual value added (ex.: economic)

Question 8

What are the ways of creating value in business relationships?

Answer 8

Personal Interaction
1. Supplier led
- Suppliers identify current customer problems and propose solutions to which customer adapt

2. Co-creation
   - Suppliers develop value propositions that customer assess. Customers that integrate ressource with suppliers to co-produce value.
3. Customer led
   - Customer face problems and interact with suppliers to generate their own ideas on the basis of a deep understanding of the suppliers capabilities.

Impersonal Interaction
4. Transactional or Routinized Exchanges
- Customer order standardized commodities on pre-negotiated terms

5. Request for proposals
   - Customers specify what they want to be manufactures without interacting with potential suppliers

Question 9

What are the three aspects to master to sell value-based?

Answer 9

1. Understanding the customer’s business model
   - The degree to which a salesperson focuses on identifying key drivers of customers’ earning logic
2. Crafting the value proposition
   - The degree to which a salesperson builds up quantified evidence about the size of the market offering value opportunity in terms of its impact on the customer’s business
3. Communicating the value
   - The degree to which a sales person focuses on convincing customers that the proposed offering would impact their profit statement