Value creation and value
proposition
DR JAN ALPENBERG, PHD, ECON DR
TYNDALE UNIVERSITY
TORONTO, ON
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Competitive Advantage
 Competitive advantage
 A firm’s profitability is greater than the average profitability
for all firms in its industry
 Sustained competitive advantage
 A firm maintains competitive advantage for a number of years
 Profitability = Profit/Capital
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value Creation per Unit
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Main factors that creates value and competitive
advantage:
 Superior quality (both percieved and technical)
 Superior innovation
 Superior effeciency (internal and external)


Internal – output/input – ”to do the things right”
External – output/goals – ”to do the right thing”
 Superior customer responsiveness (leadtime,
satisfaction, loyalty, unique products)
 To offer the customer what they want, when they want it,
in the right quantity, to the right quality, to the right
price)
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value proposition
 How is your company going to create value for the
customer?
 What are the components/attributes that creates the
value?
 List your components…


What are the things the customer is buying?
What do the customer get when they buy the product?
Functions?
 Benefits?
 Savings?
 What is the deal?

Jan Alpenberg, Youth Unlimited, Blueprint 2012
Value Creation and Pricing Options
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Comparing Toyota and General Motors
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Differentiation and Cost Structure: Roots of
Competitive Advantage
Jan Alpenberg, Youth Unlimited, Blueprint 2012
Distinctive Competences and Competitive
Advantage
 Distinctive competencies
 Firm-specific strengths that allow a company to gain
competitive advantage by differentiating its products and/or
achieving lower costs than its rivals
 Arise from resources and capabilities
Jan Alpenberg, Youth Unlimited, Blueprint 2012
The Role of Resources
 Resources
 Capital or financial, physical, social or human,
technological, and organizational factor endowments

Tangible and intangible
 A firm-specific and difficult to imitate resource is
likely to lead to distinctive competency
 A valuable resource that creates strong demand
for a firm’s products may lead to distinctive
competency
Jan Alpenberg, Youth Unlimited, Blueprint 2012
The Role of Capabilities
 Capabilities
 A company’s skills at coordinating and using its resources
 Capabilities are the product of organizational
structure, processes, and control systems
Jan Alpenberg, Youth Unlimited, Blueprint 2012