Value Creation in Business Markets

Introduction

Companies exist because they provide value to a number of stakeholders, their customers included. Creating value is therefore fundamental for a company’s ability to becoming successful. Value creation has implications both for the overall strategic performance of companies, in particular for its marketing performance. This course will draw on fundamental concepts from strategy and business-to-business marketing theory, where value creation is concerned with a company’s ability to develop and sustain business relationships with suppliers, customer and managing a network of connected parties. The course will help to develop an ability to structure and analyze problems within this context, and provide appropriate tools and concepts for solving them.

Course content

The course is structured around four main areas relevant to strategy and business market management: (1) The analytical foundations of value creation (2) Value co-creation (3) Value creation and b relationship development (4) Value appropriation and business model design.

The analytical foundations of value creation
Some organizations are more successful than others; they create and appropriate value by competing and cooperating with a number of stakeholders in their environment. To understand how successful organizations deliver and capture value we need to apprehend both the organization and its environment. Internal strategy analyses illustrate how resources and activities contribute to organizational performance. The purpose of external analysis is to analyze how external factors influence organizational strategies. The information obtained from external and internal analyses are synthesized in a SWOT framework, which, if correctly developed and employed, is a fruitful tool when generating strategic alternatives and making decisions.   

Value co-creation
Here the main focus is on value co-creation and what this implies for companies. We will discuss the importance of marketing within firms and the role of business marketing for value creation. We then move over to specifics of B2B marketing such as customer-supplier interaction and relationship management. Particularly we will focus on the buying process of B2B customers and supplier relationship development. 　

Main themes covered in this section:

• B2B Marketing principles
• Business relationship fundamentals

Industrial buying behaviour　

Value creation and customer relationship development
Here we will focus in depth on value and what value creation implies for business relationship management. Particularly we will discuss customer relationship development. We will study how value can be created across multiple business relationships such as business networks and marketing channels. The students will also learn how to understand industrial buying behaviour. Finally, we will discuss what this implies for strategic business market management.　

Main themes covered in this section:

• Managing business relationships with customers and suppliers
• Business networking

Value appropriation and business model design
Organizations handle inter-firm interdependencies in order to both create and appropriate value. We therefore need to address both value creation and value appropriation. Value appropriation concerns the private share of the created benefits; how relational rents are appropriated by individual organizations.

Important stakeholders may be essential in co-creating value with a focal organization, but they may also be able to restrict this organization’s appropriation capacity, and consequently undermine its performance. Competitive pressures, bargaining power and cooperative mindsets all influence the appropriation capacity of a focal organization. Insights into business model design help to balance the tradeoff between value creation and value appropriation.