Value creation and value proposition Dr Jan Alpenberg, PHD, Econ Dr Tyndale University Toronto, ON Jan Alpenberg, Youth Unlimited, Blueprint 2012
Competitive Advantage A firm’s profitability is greater than the average profitability for all firms in its industry Sustained competitive advantage A firm maintains competitive advantage for a number of years Profitability = Profit/Capital Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value Creation per Unit Jan Alpenberg, Youth Unlimited, Blueprint 2012
Main factors that creates value and competitive advantage: Superior quality (both percieved and technical) Superior innovation Superior effeciency (internal and external) Internal – output/input – ”to do the things right” External – output/goals – ”to do the right thing” Superior customer responsiveness (leadtime, satisfaction, loyalty, unique products) To offer the customer what they want, when they want it, in the right quantity, to the right quality, to the right price) Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value proposition How is your company going to create value for the customer? What are the components/attributes that creates the value? List your components… What are the things the customer is buying? What do the customer get when they buy the product? Functions? Benefits? Savings? What is the deal? Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value Creation and Pricing Options Jan Alpenberg, Youth Unlimited, Blueprint 2012
Comparing Toyota and General Motors Jan Alpenberg, Youth Unlimited, Blueprint 2012
Differentiation and Cost Structure: Roots of Competitive Advantage Jan Alpenberg, Youth Unlimited, Blueprint 2012
Distinctive Competences and Competitive Advantage Distinctive competencies Firm-specific strengths that allow a company to gain competitive advantage by differentiating its products and/or achieving lower costs than its rivals Arise from resources and capabilities Jan Alpenberg, Youth Unlimited, Blueprint 2012
The Role of Resources Resources Capital or financial, physical, social or human, technological, and organizational factor endowments Tangible and intangible A firm-specific and difficult to imitate resource is likely to lead to distinctive competency A valuable resource that creates strong demand for a firm’s products may lead to distinctive competency Jan Alpenberg, Youth Unlimited, Blueprint 2012
The Role of Capabilities A company’s skills at coordinating and using its resources Capabilities are the product of organizational structure, processes, and control systems Jan Alpenberg, Youth Unlimited, Blueprint 2012