Knut HaanæsNorwegian School of Management MBA Session 2: Value creation analysis Knut Haanæs Associate Professor Norwegian School of Management - BI

Knut HaanæsNorwegian School of Management Value creation analysis Boeing 767 case discussion The value chain Case wrap up

Knut HaanæsNorwegian School of Management Source: Porter (1985); Stabell and Fjeldstad (1997) The value chain The value shop The value network Types of value creation

Knut HaanæsNorwegian School of Management Value chain Infrastructure Human resource Technology development Purchasing Ingoing - logistics Manufacturing Outgoing - logistics Sales and marketing Service SUPPORT ACTIVITIES PRIMARY ACTIVITIES Porter (1985) Margin Industrial company

Knut HaanæsNorwegian School of Management Cost drivers of value chain Economies of scale Learning effects Capacity utilization The link between activities Relationships with other companies Timing Integration Location Institutional factors Reduce costs

Knut HaanæsNorwegian School of Management Source: Porter (1985); Stabell and Fjeldstad (1997) Value chain Forms of value creation Manufacture products * Transformation * Chained interdependence * Long linked technology * Scale effects * Sequential dependence * Chain of chains

Knut HaanæsNorwegian School of Management Industry of chains Source: Porter (1980) SuppliersCustomers New entrants Substitutes

Knut HaanæsNorwegian School of Management Competitive Rivalry Source: Porter (1980) Suppliers Buyers New Entrants Substitutes Porter’s industry framework

Knut HaanæsNorwegian School of Management Positioning Product Differentiation Cost Leadership Focus Product differentiation focusCost leadership focus Strategic advantage COST UNIQUENESS INDUSTRY SEGMENT Source: Porter (1980)

Knut HaanæsNorwegian School of Management Knut Haanæs Stabell and Fjeldstad (1997) Value shop SOLVE PROBLEMS * Problem solving * Different disciplines * No line; circle * Mostly primary activities * Reputation driven * Industry: Referrals

Knut HaanæsNorwegian School of Management Stabell and Fjeldstad (1997) Value network Mediates customers * Mediating technology * Network of customers * Synchronous activities * Value created simultaneous, vertical and horizontal co- production * Cooperation and competition

Knut HaanæsNorwegian School of Management Value creationCompetenceRelations Chain Shop Network Efficiency Scale Quality Flow Quality Reliability Problem solving New combinations Mobilize competencies Reputation Referrals Sub-contracting Contracting Segmenting Communicating Many relations to many customers Many co-operative / competitive partners Value creation and resources