The Value Net A Tool for Competitive Strategy

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Edition: 1st
Format: Hardcover
Pub. Date: 1999-10-25
Publisher(s): WILEY
List Price: $106.66

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Summary

Once you come to believe in a map, it is very difficult to change it, and, if your facts are wrong then you will be relying on a map that is wrong too. Too often 'mental maps' act like blinkers rather than guides - preventing us from acting effectively. Rafael Ramirez (from the Preface) The Value Net A Tool for Competitive Strategy Cinzia Parolini SDA Bocconi, School of Management, Milan, Italy Faced with a continuously changing, and an increasingly competitive, business environment, strategic analysts and senior managers are still reluctant to forsake the familiar and traditional tools and models which were conceived in the very different world of the 1970s and 1980s. However, these methods of analysis are less and less applicable to the blurred and shifting boundaries of today's business world. This book challenges the tools and models that we use when looking at how value is created, shaped and maintained and presents a new and completely viable methodology - the value net. This methodologyprovides the reader with a new way of dealing with value in the modern environment. Above all it can be used for the analysis of competitive systems that cannot adequately be analysed using established models. Supported by an impressive array of case studies from industries with which most people will be readily familiar - books, online trading, music, coffee etc. - the book argues that in order to remain competitive, strategists, planners and managers should not use yest

Author Biography

<b>Cinzia Parolini</b> is Associate Professor of Business Administration at Bocconi University and Senior Faculty Member at the Strategic Management Department of SDA Bocconi. She is responsible for in-company research in the field of competiti ve intelligence and strategic management and co-ordinates a research team that applies the Value Net methodology within different industries on behalf of individual companies.

Table of Contents

Preface xi
Foreword xiii
Acknowledgements xvii
Introduction xix
The new economics of value-creating systems
1(58)
A schema for interpreting current changes
2(4)
Developments at the level of competitive systems
6(35)
From realization to support activities
7(7)
Changes in cost structures
14(4)
Overcoming the trade-off between costs and differentiation
18(2)
Changes in the role of consumers
20(2)
Connectivity and unbundling
22(1)
The many faces of connectivity
23(3)
The new economics of information arising from universal connectivity
26(5)
The relationships between connectivity and business cost structure
31(1)
Unbundling and rebundling
32(5)
Systemic products and the spread of industry standards
37(1)
Finished products
38(1)
Users
38(1)
Components
38(3)
Evolution at company level: from enterprises to value-creating systems
41(8)
Focus on core competences
43(1)
Participation in more than one value-creating system
44(1)
The interconnected company
45(2)
Integrated and lean companies
47(1)
Internal and external flexibility
48(1)
Environmental developments and the evolution of managerial disciplines
49(10)
The evolution of economic studies
49(5)
Strategic analysis models for the new economic paradigm
54(5)
The value net
59(48)
Value-creating systems
59(9)
A definition of value-creating systems
61(5)
Subjectiveness of the boundaries of value-creating systems
66(2)
The value net: a tool for the analysis of value-creating systems
68(12)
The broad perspective of the value net
69(1)
Porter's perspective in value system analysis
69(2)
The value net perspective in VCS analysis
71(6)
Unbundling strategic thinking: activities as key elements of strategic analysis
77(3)
The elements of the value net model
80(7)
Value net nodes
81(1)
The arcs in the value net
82(5)
The classification of activities
87(20)
Realization activities
90(1)
The nature of realization activities
90(1)
Flows connecting realization activities
91(1)
The costs arising from realization activities
91(1)
Support activities
91(1)
The nature of support activities
92(3)
Flows connecting support activities
95(1)
A classification of support activities
96(3)
The costs arising from support activities
99(1)
External transaction management activities
99(1)
The nature of transaction management activities
100(4)
The costs arising from transaction management activities
104(1)
Consumption activities
104(1)
Respresenting the activities
105(2)
The meanings of value
107(44)
The meaning of `value' in value net methodology
107(8)
The meaning of value in microeconomics
110(1)
The meaning of value in the value net approach
111(1)
The meaning of value in strategic management studies
112(3)
Possible meanings of net value for customers
115(2)
Absolute net value received by customers
117(15)
The elements of absolute net value: classification by nature
119(1)
Tangible elements
119(1)
Intangible elements
120(1)
Services
121(2)
Economic elements
123(1)
The elements of absolute net value: other classifications
124(1)
Increased performance or reduced costs
125(4)
Hygienic and motivating elements
129(2)
Control of the element on the part of an economic player
131(1)
When costs are sustained
131(1)
Differential net value received by customers
132(15)
The evaluation of differential net value: a simplified approach
135(2)
The evaluation of differential net value: a complex approach
137(1)
The market-perceived quality profile
138(2)
The market-perceived price profile
140(4)
The customer value map
144(3)
Value provided and market-perceived value
147(4)
Improving the offer system
149(1)
Modifying the offer system
149(1)
Using the signals of value
149(2)
Using the value net
151(74)
Industry analysis: overcoming the limitations of traditional models
151(17)
The traditional analysis of industry attractiveness
151(4)
The traditional techniques for defining and segmenting industries
155(1)
The map of strategic groups
155(1)
Industry segmentation
155(2)
The basic limitations of traditional industry analysis
157(1)
The product-based definition of the competitive system
158(1)
The hypothesis of substantial homogeneity in the configuration of competitors
159(1)
The hypothesis that the boundaries of a competitive system can be defined
160(8)
Structural analysis of the nodes in a value-creating system
168(12)
Recovering structural analysis at node level
169(2)
New determinants of structural attractiveness
171(1)
The critical nature of the node
172(1)
Visibility of the node
173(1)
Learning potential of the node
174(1)
Extendibility of the node and/or its related know-how and resources
175(4)
Node routing function
179(1)
The fundamental steps in value net analysis
180(45)
Preliminary identification of consumption activities
181(4)
Description of traditional VCSs
185(1)
Definition of production and support activities, their aggregation in nodes and the identification of significant flows
186(2)
Identification of the boundaries of the economic players
188(4)
Structural analysis of the nodes
192(2)
Market segmentation on the basis of ideal VCS configurations
194(6)
Analysis and comparison of alternative value-creating systems
200(13)
Identification of opportunities for innovation
213(1)
Comparing the analysed system with emerging alternatives
214(1)
Borrowing strategies and solutions from similar VCSs
215(1)
Identifying system bottlenecks
215(1)
Identifying inefficient nodes
216(1)
Identifying new ways of involving final customers
217(1)
Identifying compromises in VCS configuration and opportunities in process streamlining
218(1)
Identifying the consequences of technological trends
219(2)
Redefining the boundaries of system players
221(1)
Controlling support activities
221(1)
Exploiting the possibilities of extension
222(3)
References 225(8)
Index 233

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