3. VALUE CREATION Introduction
• Business begins with value creation.
• The most successful organizations understand that the purpose of any
business is to create value for customers, employees, and investors, and
that the interests of these three groups are inextricably linked.
• Therefore, sustainable value cannot be created for one group unless it is
created for all of them.
• The first focus should be on creating value for the customer, but this cannot
be achieved unless the right employees are selected, developed, and
rewarded, and unless investors receive consistently attractive returns.
4. VALUE CREATION defined
• Value creation is the primary aim of any business entity. Value is created through
knowledge and creativity.
• In today’s economy, value creation is based typically on product and process
innovation and on understanding unique customer needs with ever-increasing
speed and precision.
• Creating value for customers helps sell products and services
• For the customer, value creation entails making products and providing services that
customers find consistently useful.
• Creating value allows companies to differentiate their products from those of
competitors.
5. Business success comes from value creation for
owners, customers, and employees. Value is
being built or destroyed throughout your
business.
How Does Value Creation Lead to
Business Success?
You get value when you give value. Your business
will only succeed if you provide great value to
both your customers and to employees.
6. Creating Values for Customers
• For the customer, it
entails making products
and providing services
that customers find
consistently useful.
• It fosters repeat purchase
7. Creating Values for Employees
• We can’t just provide value to our
customers to succeed. We must also
provide value to our employees.
• Effective employees want that sense
of purpose and accomplishment,
not just paychecks
• Value must therefore be created for
those employees in order to motivate
and enable them.
8. Creating Values for Owners/Investors
• Creating value for investors means delivering consistently high returns on
their capital.
• These can be achieved only if a company delivers sustained value for
customers.
• Business organisations should constantly look for ways to provide value to
the customers and employees.
• A CEO alluded that “when we create value for our employees and customers, they
provide value to us as owners”.
9. A scenario ……………………………
• For example, a business owner created a high-tech gadget at a
high price BUT customers aren’t willing to pay the price or don’t
see a need for the device.
• Do you think he has created any value?
If Yes or No, what can be done to salvage the situation?
10. Examples….
•Failed Companies
• Nokia
• Motorola
• SAGEM
• Toshiba
• Panasonic
• Blackberry
•Thriving Companies
• Coca-Cola
• BIGI drinks (Bigi Cola, Orange, Apple, Bitter Lemon,
Soda Water and Lemon & Lime, Bigi Tropical and
Bigi Chapman)
• Apple products (iPhone, iPad, iPod, MacBook
• Toyota
• Samsung
• Techno
• HP
• Google
• Nestle
• Telecommunication Networks (i.e MTN, Glo, etc.
820 manufacturing companies shut down in 9 years, says NACCIMA and MAN (i.e. from 2011-2019)
350 Nigerian firms shut down since 2015
272 firms shut down in one year – MAN - Punch Newspapers (2016)
13. Where value creation occurs
• You can create value throughout your company. It doesn’t just
happen when you sell your product.
• It starts with how you structure your company.
• Value creation continues with how you build your product or
provide your service. It’s completed with the sale.
• Common selling wisdom is to sell benefits and not features.
14. Successful value creation strategies
Some of the major themes that underlie successful value creation strategies in
the information economy are:
• Product and process innovation
• Detailed, real-time understanding of changing needs of well-defined
customer segments (frequently database enabled)
• Leveraging emerging technologies in existing markets (particularly
information technology)
• Leveraging technology or regulatory changes to create new markets
• Reconfiguring company and industry value chains
• Creating win/win partnerships with customers, employees, and suppliers
