The Future of CompetitionMedia Management Course

Group 4

Zhang Yuanyuan : 70381@student.hhs.se

Zhong Wei : 70382@student.hhs.se

Chi Mingli : 70365@student.hhs.se

Guo Xing : 70368@student.hhs.se

Outline

Abstract

Key points

Example

Abstract

In buyer–seller relationships, the focus has moved beyond individual firms to value-creating networks formed by key firms in the value chain that deliver value to the end consumer.

The article develops a rationale for value-creating networks using three core building blocks: superior customer value, core competencies, and relationships.

The rationale is developed based upon an understanding of the value-creation process and its links to core capabilities of firms in the network.

The importance of inter-firm relationships in realizing the true potential of the value-creation networks is also highlighted.

The authors argue based on their sample analysis of some examples that competition in the future will shift to the network level from the firm level.

The influence of some emerging business tools such as electronic commerce on redefining value creation is also discussed.

Key Points

Value-creating networksSuperior customer value

Understand value

Value is the relationship of a firm’s market offering and price weighed by the consumer against its competitor’s market offering and price.

Step of creating better value than competitors

fully integrate the resources use the core capabilities deliver a product that fully satisfies the needs at a competitive price create superior customer value

Multi-benefit model of choice

Two measurement dimensions: the importance of benefit and the performance of firm on benefit

To understand customer value, one needs to go back and revisit the To understand customer value, one needs to go back and revisit the marketing concept.marketing concept.

Value-creating networksSuperior customer value

Firms that can deliver

superior value

in the marketplace will win

the battle for the consumer or customer.

Value creation is more complex in business Value creation is more complex in business markets.markets.

Value-creating networks Core competencies

Core capabilities, while few, are the key to delivering superior value. They provide the means to deliver superior performance on the attributes that are important to the buyer.

To be a core competency, the skill must …

add significant value to the market offering

help the firm move across multiple markets

be performed at a superior level that very few firms can emulate.

The competency gives firms the ability to deliver performance on The competency gives firms the ability to deliver performance on important benefits.important benefits.

Value-creating networksRelationships

Firms are moving into an environment…

in which they will not compete against

each other but will become a member

of a network of firms that will compete

against another network of firms.

Value-creating networks are firms that come together to create Value-creating networks are firms that come together to create customer value.customer value.

Value-creating networksRelationships

The ideal partner is…

the one who adds significant value to

your market offering

and at the same time presents low risk as

a partner.

Develop strong relationships with key partners who can add value to the Develop strong relationships with key partners who can add value to the market offering.market offering.

Facilitative Integrative

Loser Developmental

low

high

Operating risk

low highValue added to

partner

Evaluation of potential partners

Value-creating networksThe model

Doing a value network analysis challenges the firm and its model of Doing a value network analysis challenges the firm and its model of doing business.doing business.

The model uses the three core

concepts of value creation,

namely superior customer

value, core capabilities and

relationships, to propose

a reciprocal model that

captures the nature of

Interrelationships between

the three core concepts.

E-Commerce

E-Commerce is to help distinguish between product value-added and E-Commerce is to help distinguish between product value-added and process value-added.process value-added.

Negotiated Bid

Deep relationship

Bid Relationship

high

low

Product value added

low highProcess value

added

Relationship between product and process value

The firm with the most value

to offer will likely be able to

negotiate a higher price than

the lowest bidder who provides

less value. The greater the

impact of the seller’s product

values upon the buyer’s product

the greater the seller’s ability to

extract a premium price.

Example

Computer Weekly Introduction <Computer Weekly> was established in 1992, and today is the No. 1 sale IT newspaper in China.

The statistics in 2007 showed that its market share was 71.55% and the coverage rate was 74.09%.

Its official website Shudoo provides varieties of information, resources, and IT services, which make it become a one-stop portal website.

Official website: http://www. shudoo.comOfficial website: http://www. shudoo.com

Analysis

Official website: http://www. shudoo.comOfficial website: http://www. shudoo.com

Computer Weekly

Value-creating networks and e-commerce

In 2004, Computer Weekly established co-partnership company with Tom Group which has extensive business and rich management and marketing experience. They began to search for new market resources including network resources, human resources and capital resources. Computer Weekly soon expanded its brand influence overseas. At the same time, the co-partnership company developed new areas such as data analysis and consultant, which provided clients complete service about market information.

In 2008, Computer Weekly created cooperation with SNDA Group, which is the leading online game company in China, and entered the game industry. Nowadays, the traditional print media are facing fierce competition. The e-commerce becomes a new way out to gain profits in this competitive industry.

References

Articles

Konthandaraman & Wilson

The Future of Competition Value-Creating Networks 2001

Online resources

http://www.shudoo.com/

http://www.cpcw.com

http://www.snda.com

http://news.xinhuanet.com/newmedia/2005-03/04/content_2648218.htm

http://it.people.com.cn/GB/42891/42893/7932555.html

Thank you!

Group 4

2009.01.26