Analyzing Literature Reviews Of Value Creation †Free Samples

Question: Discuss about the Analyzing Literature Reviews Of Value Creation. Answer: Introduction The primary objective of a business organization is to create value for the customers. Value creation helps the organization to sell products as well as services to the customers and create value for the shareholders (Austin and Seitanidi 2012). It creates value for the shareholders as the price of the stock increases and insures future availability of capital in order to help in the funding of operations. According to financial perspective, a business is said to create value by earning revenue over its expenses. This is considered to be a traditional concept. This traditional concept is no longer valid in the present generation. Value creation in the present generation is based on intangible drivers such as people, idea, brand and innovation. This report discusses about the concept of value creation in details by analyzing literature reviews. It critically analyzes the theoretical background of the concept of value and gives a proper description of value creation. It gives an overview of the value creation spheres. It discusses about the roles played by the service providers and customers in creating value. This report also discusses how brand communities on social media will help in creating value. This report explains the process of value creation along with value outcomes. Literature Review Theoretical background According to Gronroos and Voima (2013), value is considered to be an elusive concept. In the recent times, the concept of value has become more experimental. Value creation can be considered to be a process that aims at increasing the well being of the customers. According to Standvik, Holmlund and Edvardsson (2012), independent services and products do not create value for the customers. There can be incidents where the products that are sold by the company have good quality and features. But the service providers do not behave in a proper manner. In this type of situation value is not created. Interrelationship between products and services determine the value that is created. Customers do not simply focus on the economic and functional benefits. They also focus on other dimensions like social, emotional, environmental and ethical dimensions. Laroche et al. (2012), social networking websites can be used for creating brand community that will play a positive role in creating values for the customers. According to Acharya et al. (2012), LBOs or leveraged buyouts have the ability to create value through powerful incentives and high leverage. Gummerus (2013) explained the value can be created by gaining competitive advantage. Innovation plays a significant role in creating value for the customers (Chemmanur, Loutskina and Tian 2014). Innovation helps organizations to gain competitive advantage and economic growth over a long period. Value Creation Value can be created by the combined actions of the customer as well as the service provider (Gronroos and Voima 2013). Earlier only product oriented dimensions were considered for creating value. In the present times, service oriented dimensions are also given importance. Value is said to be created during the period of usage. The process of value creation by customers is non linear. Customers have the ability to create value in the brand communities by using four processes (Laroche et al. 2012). These four processes are social networking, community engagement, impression management and use of brand. The brand of the communities plays a significant role in creating value. Businesses aim to create value and deliver value in an effective manner so that this value will help in generating profit after the cost. Value is said to be created through a process that is irreversible in nature. There are several ways to create value. A well built product that has several features cannot create value on its own. There are several other factors associated with the products and services that are sold to the customers. Businesses that are being operated in the present generation do not follow the economic theory to create value. A business is able to create value by obtaining competitive advantages (Miller and Mork 2013). Competitive advantages can be gained by doing something that is different from the rest. Every organization has a value proposition that makes it different from the rest. Value chain can be created by using Porters Value Chain ((Fearne, Garcia Martinez and Dent 2012). This model is divided into two broad categories of activities like primary and support activities. The primary activities include: Inbound logistics: This is related to the activity of collecting, storing as well as distributing input data internally. Operations: This is the processing activity that converts inputs into outputs. The Operational system present in this stage is responsible for creating value. Outbound logistics: This is related to delivering products or services to the customers in an efficient manner. Marketing and sales: This activity involves the process of persuading clients to buy products as well as services. Service: This activity deals with maintaining product value and service value to the customers. The secondary activities deal with the development of technology, procurement process, managing human resources and development of the infrastructure of the firm. These activities must be integrated in such a manner so that it generates high value for the customers. Value Creation Spheres There are several spheres of value creation (Gronroos and Voima 2013). The roles of the customers and the firms vary depending on the spheres to which they belong. Provider Sphere: This sphere is responsible for generating potential value and transforming this value into the real or in-use values. The value creation of the customers is facilitated by the activities that are performed by the organization. The firm acts as the value facilitator in the provider sphere. The providers are responsible for generating outputs that the customers can use for creating value. Joint Sphere: In this sphere, customers are co-creator of value. Direct interactions are responsible for creating value for the customers. Absence of direct interaction does not lead to value creation. Interaction develops the platform for creating value. The value creation can either be positive or negative depending on the interaction between organization and customers. The process of interaction can either be destructive or creative. The provider can ask the customers to become co-producers as well. Customer Sphere: The customer sphere is gaining importance with time. In this sphere, the role of the provider is passive. The customer value creation is independent of the provider. The value is created through the experiences that are gathered by the users with the passage of time. Customers can create value either by directly or indirectly interacting with the service providers. Impact of Social Media in Value Creation Social media plays a significant role in the process of value creation. Social media platforms like Twitter and Facebook play a major role in creating value for different brands and businesses (Hamilton, Kaltcheva and Rohm 2016). Brands find an effective way to communicate with young consumers. Initially the brands tried to create value through television and radio. But this method is not effective because young consumers rely more on digital marketing and communication. Young consumers have a tendency to get influenced by their peers and friends in making decisions regarding purchases and developing brand attitude (Bechmann and Lomborg 2013). Brands can create communities in the social media platforms for interacting with the customers and creating brand awareness. Consumers play an active role in creating value. The brands develop several communication strategies to make the consumers aware of their brands and create value. Consumers have the tendency to get emotionally involved an d gain huge experience on social media platforms. Companies can promote their brands by taking the help of social media platforms. Companies can get to know about the likes and dislikes of the consumers by interacting with them on the social media platform (Agnihotri et al. 2012). Customer queries can also be resolved very quickly. This will attract the customers towards a particular brand. This will also help in increasing the level of customer satisfaction and create value. There are various ways by which customers can get engaged with various brands that form communities on a social media platform. A restaurant can promote their new menu on Facebook to attract new customers. It has been pointed out that the customers must have a self motivation to get engaged with the brands that are being promoted on social media. If they are not motivated then it will result in a negative result. The online marketers are suggested to develop and improve new communication strategies for maximizi ng the probability of attracting the customers. Marketing research investigates the various methods of interaction that is possible between the customers and the organizations (Pagani 2013). Customers are satisfied only when their expectations are fulfilled. Interaction satisfaction plays a major role creating value. Utilitarian as well as hedonic outcomes are associated with consumers when they are engaged in social media communication and interaction with the various brands. Value Outcomes There are four logics for determining the value outcome. The first logic considers value to be the means-ends; second logic is based on benefits and sacrifices, third logic is based on the experience outcomes and the fourth logic is phenomenological in nature. In the value as means-ends approach value is appreciated at various abstraction levels (Gummerus 2013). Here the attributes of the products are considered to be at the lowest level, performance of the attributes is at the middle level and the purpose of the product at the highest level. This approach considers the customer values (Beattie and Smith 2013). This approach has found out that several motives and goals are unrecognized and unconscious. In the second approach value is viewed as utility perception of the consumers that is based on the benefits and sacrifices. Sacrifices can be monetary as well as non monetary. This is applicable to the services as well as products. The third approach aims to enrich and supplement the c ustomer views so that they can make logical decisions. This approach says that customer values are dependent on the type of experience which they gather through the process of interaction between customers and organizations. If the experience is good and satisfactory then there will be value creation(Gummerus 2013). If the experience is not good then it will have a reverse effect. The fourth approach states that value will be created if when the well being of the customers have improved. Managers are able to get a systematic insight into the concept of value. Value Creation and Competitive Advantage The organizations must identify its core competencies. These core competencies of the organizations are responsible for creating competitive advantages (Hollensen, 2015). Core competencies must be identified in order to grow and survive in a competitive market. Every organization has its own competitive advantage over the competitor firms that are running their business in the market. The competitive advantage of a firm can be many its internal processes, customer service or even its technological advancements. If an organization wants to deliver sustained value to the customers then the organization needs to produce as well as deliver advance and better solutions (Campbell, Coff and Kryscynski 2012). These solutions must be affordable and better than that offered by their competitors. This can be possible when the organization has unique competitive advantages over its competitors. The organizations will be able to generate more revenue and sustain its business in the competitive en vironment of the market. Conclusion It can be concluded from this report that businesses that are being operated in the present generation do not follow the economic theory to create value. A business is able to create value by obtaining competitive advantages. This report said that competitive advantages can be gained by doing something that is different from the rest. It said that customers do not simply focus on the economic and functional benefits. They also focus on other dimensions like social, emotional, environmental and ethical dimensions. This report stated that value chain can be created by using Porters Value Chain. This model is divided into two broad categories of activities like primary and support activities. These activities must be integrated in such a manner so that it generates high value for the customers. It concluded that the roles of the customers and the firms vary depending on the spheres to which they belong. This report showed the significance of social media in the process of value creation . It also gave an overview of the four logics for determining the value outcome. References Acharya, V.V., Gottschalg, O.F., Hahn, M. and Kehoe, C., 2012. Corporate governance and value creation: Evidence from private equity.The Review of Financial Studies,26(2), pp.368-402. 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