Value Configurations Principles for Internet Strategy
V.T. Raja, Ph.D.,
College of Business
Oregon State University
Value ConfigurationsSource: Chapter 7 of book by Afuah and Tucci
Chain
Shop Network
Find Solve
Evaluate Execute
Choose
Value ChainSource: Michael Porter
• What is basic premise of value chain?– Value created by transforming inputs into products
Inbound Logistics
Operations
Outbound
Logistics
Marketing & Sales
After-sales
Service
Firm Infrastructure
Human Resources Management
Technology DevelopmentProcurement
Value ShopSource: Chapter 7 of book by Afuah and Tucci
Problem Finding & Acquisition
Problem Solving
Control/ Evaluation
Execution
Choice
Firm InfrastructureHuman Resources ManagementTechnology DevelopmentProcurement
Simon’s Problem Solving Model
InfrastructureSupport
• What is basic premise of value shop?– Value created by providing solutions to customer
problems
Value NetworkSource: Chapter 7 of book by Afuah and Tucci
Network promotion and contract management
• Invite and select customers tojoin network
• Initialize, manage andterminate contracts
Firm InfrastructureHuman Resources ManagementTechnology DevelopmentProcurement
Service provisioning Establish,
maintain andterminate links
Billing forvalue received
Infrastructure operation
Maintain andrun physical and information network
• What is basic premise of value Network?– Value created by providing intermediary services
Combinations of Value Configuration
Automobile manufacturers: mass production
Cisco: solves problems
EBay: auctionnetwork
Find Solve
Evaluate Execute
Choose
Principles for Internet Strategy (Porter)Strategic Positioning
• Start with the right goal
• Deliver a unique value proposition
• Develop a distinctive value chain configuration
• Make trade-offs for robust strategy
• Fit all elements of company to the strategy
• Maintain continuity of direction