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