From Theory to Practice: Understanding Value-Creation in Service Companies

Foreword. 1 Technology Companies, Services and Networks. Introduction. The growth of the service sector. The different types of service. Services in technology or engineering sectors: A neglected category? Engineering and service. Common characteristics and issues among service businesses in technology sectors. Is this really a distinct market or category? Summary. 2 Marketing Services. Introduction. One more time: What is marketing? Different manifestations of marketing. The evolution of marketing in an organisation. Marketing services. Marketing in technology sectors. Summary. 3 Gaining Strategic Insight into Service Markets. Introduction. Why market understanding is essential. Important market dynamics to understand. Means of gaining an objective market perspective. Opportunity analysis. Summary. 4 Internal Perspectives and their Strategic Impact. Introduction. Strategic context. Strategic intent: The need for clarity of purpose. Methods of determining strategic focus. Brand equity as a source of strategic advantage. Customer equity. Portfolio strategy. Go to market capability. How does the company develop strategy? Summary. 5 Creating and Positioning a Service Brand. Introduction. What brands are and the effect they have. The basics of brand strategy. Corporate branding: The brand strategy for service companies. Practicalities: How to create a brand where none exists. Practicalities: Repositioning and brand extension strategies as a means of entering service markets. A note on political will and leadership vision. Summary. 6 Innovation and New Service Design. Introduction. Service vision. Common mistakes in service design. The role of innovation and service development. Innovation in service businesses. Value propositions. Differentiation and how to achieve it. Categorisation and its implications for new service design. Practicalities. Summary. 7 Selling Services. Introduction. How people buy. The sales strategies of technological service companies. Creating a service sales force. Generic sales structures applicable to services. The practicalities: Managing the sales process. Summary. 8 Marketing and Selling Services to Major Customers. Introduction. Prioritising customer accounts. Major customer sales strategies: Account management. Partnership selling: Major account management in consultancies. Cultural variations and their effect on account management. Account planning. Service quality for major accounts. Summary. 9 Communicating with Service Markets. Introduction. Effective communications strategy. Aspects of communications strategy. Communications techniques particularly important to service companies. Managing the creative execution. Media planning. Practicalities and management basics. Communications during a crisis. Summary. 10 Service Quality. Introduction. The importance of service quality. Service quality and customer care: A recent history. Terminology and perceived wisdom. Analysis. Service strategy. Planning service quality. Service recovery. Satisfaction measurement. Summary. 11 Service on the World Stage. Introduction. The challenge of working across borders. International strategic considerations. International market analysis and perspective. International brand strategy. International marketing communication issues. International sales and account management strategy. International service design. Different international strategic choices. Summary. Appendix Marketing Tools and Techniques. References. Index.

Evolving deepwater operations, the emergence of unconventional plays such as shale, and the increasing digitization of the oil field are driving the evolution of the oil and gas industry service sector and changing the way service companies posture themselves in the global market. “Back in the 1970s and 1980s, service companies were very specialized,” said John B. Parry, principal energy analyst with the consultancy IHS Herold. “What you have been seeing is a merger of a lot of these disciplines.” Merger and acquisition (M&A) activity in the service sector was robust last year with takeovers involving several venerable names, including Smith International, BJ Services, and Boots & Coots. Contributing to this trend are operators that like to have a “one-stop-shop” business experience on big projects—to be provided with as many services as possible from one company, Parry said. And service companies are learning from and growing through their acquisitions, he added. “Even Schlumberger is going to learn from Smith. Baker was a huge supplier of services downhole, but they did not have a workover. So now, they have BJ. It makes them stronger financially, and reduces their risk in any one given area,” Parry said. Minimizing Risk Service companies are growing larger to share more risk, and to have more discipline and technology to minimize risk, Parry said. Current merger and acquisition trends in the service sector reflect the increasing need for integrated service disciplines, consolidated geographical operations and fortified financial posturing. For example, a service company that only specialized in Gulf of Mexico jackup rigs would be in big trouble right now because of the recent drilling moratorium, so a geographical balance is important just as is diversity in service, he said. An IHS Herold report titled “Review on the Oil Field Services Sector” predicts a healthier growth outlook for oil and gas service companies this year after being hard hit by the Gulf of Mexico drilling moratorium in 2010. The review compared oil company financial performance against performance for service companies and off-shore drilling contractors. The service sector still faces challenges. Even with the moratorium lifted, the return to drilling has been slow, which has fed a decline in rig utilization rates while new-build rigs continue to enter a sluggish market, the report said. And the service sector is facing some of the same issues as operators. “The industry will be challenged by more remote operations, deeper waters, more difficult logistics, increasingly complex geological settings, and greater degrees of temperature and pressure,” Andrew Gould, chief executive officer of Schlumberger, said in a recent speech. At a recent Bank of America/Merrill Lynch Global Energy Conference, Baker Hughes discussed its geomarket management teams’ more holistic view of the market. The company’s priorities are to improve international profitability, eliminate inefficiencies, and to revise its geomarket structure with particular attention to deepwater, unconventional, conventional and alternative energy market segments.

PurposeThe purpose of this paper is to locate different value creation logic contingencies within the resource management framework. While Sirmon et al. discuss how external environmental contingencies, such as environmental munificence, impact resource management, this paper aims to discuss a second key contingency; that is how the firm's choice of value creation logics impacts its resource management choices. This paper seeks to argue that management of the firm's resources and capabilities is contingent on the value creation logic employed by the firm.Design/methodology/approachThis paper reviews three value creation logics: value shop, value network, and value chain and then integrates them within the resource management framework.FindingsA review of extant literature indicates that value shop firms, value network firms, and value chain firms enact very different environments and thus require very different resources and capabilities to support their value creation approaches. It is argued that Sirmon et al.'s resource management framework should reflect these differences.Research limitations/implicationsThis paper points to new directions for research in value creation logic theory and provides a basis for future empirical work.Practical implicationsThis paper argues that a mismatch between a firm's value creation logic and its resource management practices will have an adverse impact on the firm's performance.Originality/valueThis study is one of the first to integrate Stabell and Fjeldstad's value creation logic theory with Sirmon et al.'s resource management framework.

The purpose of the research is to explore and identify value creation logic and strategies developed by firms and their supply chain partners in garment industry in Thailand. The methodology employed involves in-depth semi-structure interviews with 23 owners of Thai garment firms and eight executives from relevant government sector and supportive organisations. The article synthesises the empirical data and presents a summary of the finding. Dimensions of the value creation logic consist of a value creation initiative, an interaction for learning, an objective and a focus of coordination on the exchange of relationships. In this respect, two types of value creation strategies are explored in the research: 1) core value strategy; 2) value-added strategies. The research provides a better understanding of the strategic implications of the variable dimensions of the value creation logic in buyer-seller relationships.

Numerous phenomena, such as sustainability challenges and the increasing importance of knowledge and digitalisation, have tremendous impacts on the global socio-economic system. These phenomena affect the dynamic and complex business environment where different actors from various sectors interact with each other. Responding to the phenomena and changes in the business environment calls for a systemic change in the ways that value-creating activities are performed. One suggested systemic change is a transition to a sustainable circular bioeconomy. Changes in the business environment pressure established business sectors, such as the forest sector, to reconfigure their networks and value creation logic, i.e., the ways in which actors co-create value. In this dissertation I investigated how the value creation logic of the forest sector changes when entering the sustainable circular forest-based bioeconomy. The research design followed a qualitative theory-guided interdisciplinary case study strategy. I analysed scientific and non-scientific documents to determine the past and currently occurring adaptations within the forest industry’s value creation logic. I conducted interviews to identify the possible future value creation logic of forestry service providers and the readiness of forest owners to respond to the occurring changes. According to the findings, the forest sector’s value creation logic is incrementally changing towards holistically sustainable, collaborative and cross-sectoral value co-creation logic. The sector has been able to reconfigure its networks and value creation logic in the past and it seems that the sector’s actors have understood the importance of cross-sectoral collaboration and intangible resources in the sustainable value-creating activities. They have acknowledged that their attitudes and actions will affect the future value creation within the sector. To reach holistic sustainability, actors need to consider the whole forest ecosystem as a capital and a resource base from where value and benefits for the common good are co-created in a forest-based sector.

PurposeThe study aims to discuss the new value creation logic of value nets and analyze the characteristics of value nets in the context of the food industry. Previous research has shown that along with the growing importance of networking, the value creation logic is also changing from traditional chains to dynamic networks. The objective of this study is to define the characteristics of value nets and to analyze the suitability of the value net as a value creation and business model in the food industry.Design/methodology/approachThe study utilizes a case research as a method and analyzes a value net from the Finnish food industry. The empirical data comprises 29 individual semi‐structured interviews conducted with the personnel of four case companies.FindingsThe findings of the study suggest that the value net as a business model and value creation model is also suitable for food sector companies. The value net has several characteristics that were found to be significant and useful for food companies. Moreover, food companies can obtain remarkable benefits by utilizing value nets.Practical implicationsThe results of the study carry implications for managers and practitioners in terms of shedding light on the value net as a value creation model and business model in the food industry. Managers need to be aware of the developments in value creation logic and recognize that value can no longer be added in a sequential chain, but the perspective should move towards networks in which value is co‐created by the network actors.Originality/valueThus far, studies on value nets have concentrated mainly on the ICT sector and there is a limited amount of research on the food industry. The food sector, therefore, offers a new empirical context in which to conduct research on value nets. Food companies are focusing more and more on value creation and networking, and the research of value nets is therefore highly relevant to the business development of the food industry.

PurposeResearchers Kim and Mauborgne argue that firms seeking to grow in mature markets need to create new buyer value, thereby entering Blue Ocean markets, where they don't have rivals. In contrast, firms fighting rivals in bloody, Red Oceans will struggle to remain profitable. To facilitate the search for Blue Oceans the paper aims to offer managers a new tool to uncover new points of buyer differentiation.Design/methodology/approachThis paper draws from the strategy, marketing and economics literatures to illustrate how firms can enhance performance by creating Blue Oceans.FindingsThis paper suggests that one way to generate Blue Ocean strategies is to use the fundamental building blocks of value creation. Based on extensive work with value creation logics, it proposes that there are three types of value firms can offer customers: lower prices using an industrial efficiency logic; increase user connectivity with a network services logic; or enhance the offering's fit with the user needs using a knowledge intensive logic. By combining parts of two or more of the value creation logics, managers may construct innovative bundles of attributes.Practical implicationsBlue Ocean strategies are most appropriate for companies in the mature/decline phase of the product life cycle that are suffering from declining revenues and decreasing customer loyalty. Organizations facing these pressures typically attempt to increase the bottom line by increasing marketing and branding efforts while cutting costs and trying to dodge price wars. These value renovations usually meet with little success as competitors are attempting the same moves in what is largely a zero sum game. Instead of focusing on besting rivals, Kim and Mauborgne argue firms should aim for value innovation by redefining their offerings to compete in niches where there is no competition. Applying value creation logics helps managers redefine their offerings.Originality/valueThis is the first paper to outline how combining value creation logics leads to discovering Blue Oceans.

PurposeDespite increasing interest in offshoring of knowledge-intensive services, it is still undetermined as to whether the sourcing of services truly creates the anticipated value for clients. Moreover, even less is known about whether value is created for service providers in the process beyond the general service trade. This lack of knowledge is due to the challenges of capturing value creation, the unique production process of the services, and the impact of offshoring on both value creation and the production process. The purpose of this paper is to study offshored service production processes of knowledge-intensive services in order to identify direct and indirect value creation for clients as well as service providers in the process.Design/methodology/approachThe paper applies a multiple case study method and studies one conglomerate with three offshored service production processes. The chosen method allows for the investigation of the service production process and indirect/direct value creation within the process.FindingsThe study finds that there is direct value creation for the client and the service provider towards the end of the production processes as expected. However, more importantly, it finds additional indirect value creation in various production stages. The indirect value is reflected in enhanced understanding of problems and own operations for the client and increased knowledge about clients and problem-solving approaches for the service provider.Research limitations/implicationsThis study contributes to offshoring literature by providing a comprehensive understanding of value creation in service offshoring for clients as well as service providers. It also contributes to the service management literature as a study of direct and indirect value creation in services, particularly within the production process of the services.Practical implicationsThe study allows practitioners to gain insights on the value creation logic of offshored services and the value created beyond that logic. More specifically, it allows client firms to gain details of various values and benefits of service offshoring and service provider firms to gain a focused perspective on value creation in their own service production that can lead to competitive advantages.Originality/valueThe paper is novel and original through its approach to study offshoring from a value creation logic perspective, including not only the client but also the service provider perspective. It also applies a service production process perspective that is novel in offshoring literature.

We propose a typology of acquisition value creation logics derived from the dynamic capability literature and explore the organisational capabilities and implementation processes required for the effective delivery of three value creation logics: governance-based, cost-based and knowledge-based. We argue that each value creation logic calls for a specific and distinct set of acquirer capabilities and post-acquisition implementation processes. We put forward a contingency approach, where effective corporate acquirers make a conscious choice as to their predominant value creation logic based on a consideration of their organisational capabilities, which, in turn, defines the characteristics of appropriate target companies and the necessary implementation actions required to realise value post-acquisition. We discuss the implications for both acquiring firm executives and future M&A research.

PurposeTo successfully create customer value, firms must use coherent market strategies and perform value-creating activities that enable them to develop solutions to customers’ needs. However, as firms exhibit differences in how they approach value creation, their market strategies will also differ. These differences among market strategies can be described through different combinations of proactivity and responsiveness, representing each firm’s value-creation logic. This study aims to increase understanding of how firms can improve the effectiveness of their market strategies by considering their associated value-creation logics.Design/methodology/approachThe authors conceptualize market strategies as coherent sets of value-creating activities. While the types of activities within a market strategy are driven by a firm’s strategic orientations, how these activities are performed is influenced by its value-creation logic. With this as the foundation, the authors develop a conceptual typology of archetypal market strategies based on the different value-creation logics that influence them.FindingsThe authors propose four distinct market strategies – habitual, visionary, adaptive and ambidextrous – representing unique ways in which value-creation logics influence the formation of market strategies. Furthermore, the authors highlight the need for activities to reflect consistent value-creation logics to create coherent market strategies and the authors provide an exploration of the activities that enable firms to implement different types of market strategies.Originality/valueThe typology expands the concept of market strategy, introducing the idea of a value-creation logic of proactivity and responsiveness, and thus demonstrating the need for more in-depth consideration of the value-creating activities that constitute market strategies to better understand how firms can create superior customer value.

Capital structure alludes to how an organization finances its operations whether through shareholders equity, debt or a blending of both. This study was aimed to find out the determinants of capital structure in Manufacturing and Service Sectors of Pakistan and examine which capital structure theory (Trade off theory or Pecking order theory) is relevant in Pakistani context. For study secondary data was collected from financial statements of 30 Companies and then data was analyzed through Correlation and Multi Regression analysis. Results showed that leverage has negative significant relationship with tangibility in both sectors which conformed Pecking order theory is followed by firms in both sectors. Profitability has negative significant relationship with leverage in manufacturing sectors whereas it has positive non-significant relationship with leverage in service sectors. This result revealed that manufacturing sectors follow Pecking order theory whereas service sectors support Trade off theory. Moreover in manufacturing sectors growth and leverage have negative significant relationship whereas in service sectors both variables show positive non-significant relationship. Manufacturing sectors support Trade off theory but service sectors support Pecking order theory. Size and leverage show positive non-significant relationship in manufacturing sectors whereas show positive significant relationship in service sectors. Due to positive sign, they follow Trade off theory. Effective tax rate has positive non-significant relationship with leverage. Positive sign shows firms follow Trade off theory in both sectors but due to non-significant result the effective tax rate not found to be a significant determinant of capital structure. This study will help corporate managers and decision makers to make optimal capital structure decision.

PurposeThis paper seeks to answer three questions about how retailers can benefit from AI. (1) What are the main strategies for retailers to improve their AI-related data management? (2) How do retailers use AI to provide solutions in business processes? (3) What are the value creation logics of AI applications in retail?Design/methodology/approachData- and solution-centric perspectives, as well as the concept of value creation logics, serve to build the analytical framework. The grounded theory multiple-case analysis of 54 representative retailers' adoptions and implementations of AI between 2008 and 2018 help to investigate the firm's AI applications and value creation logics.FindingsThis study identifies five main strategies for AI-related data management and reveals 28 AI-powered solutions, changing 14 business processes, with five management areas involved in AI applications to create value via four logics: automation, hyper-personalization, complementarity and innovation.Research limitations/implicationsThis paper advances the research into AI applications in business and management by providing research propositions with an integrative framework to understand how firms can use and benefit from AI. However, secondary data and exploratory study still limit the findings.Practical implicationsThe findings provide retail managers with an analytical framework that can help them to develop a rationale for their strategic choices and best practices relating to the adoption and implementation of AI.Originality/valueThe originality of this paper lies in its systematic examination of AI applications and value creations in retail. The findings provide managers with guidance, rational strategic choices and best practices to take action to embrace the great business opportunities created by AI technologies.

Purpose The purpose of this paper is to explore renting models for clothing items and their value creation logics with a basis in resource interaction. Design/methodology/approach The paper relies on a multiple case study of renting models pursued by start-up companies in the Swedish context. The cases cover fashion wear as well as outdoor clothing. The theoretical frame builds on the industrial marketing and purchasing approach to business markets with a special focus on resource interaction and value creation. Findings The multiple case study provides the basis for identifying three categories of renting models: membership, subscription and individual item renting. The three models use different patterns of resource mobilisation, resource utilisation and resource combination to build their value creation logics. Research limitations/implications A plethora of different business models for sharing resources will be needed in reaching sustainable development in the fashion context. Renting models is one such model for sharing resources that increase product usage but struggles with economic sustainability. Practical implications The paper offers implications for actors in the fashion industry and capital systems by considering renting models not as tech start-ups but as sustainable start-up business models in which investments require longer time frames before showing results. Originality/value Few studies have treated the variety of renting models for clothing items. Thereby this paper extends the literature by providing a categorization of such models and how they create value.

In this article, we question the way CNs are built around the implementation of RFiD in a supply chain and what are the value creation logics among these CNs. We address three main questions: the way and types of CNs in a RFiD implementation project, the nature of the aggregator and value creation of each actor during the different phases of the project and finally the interconnections between CNs in the value creation logic. We provide answers to theses questions based on a case study that describes the implementation of the RFiD innovative technology in a jewellery supply chain.

Purpose The purpose of the research is to put to a test the belief that the idiosyncratic internationalisation process of Internet firms is homogeneous. The research question is thus, “How does the value creation logic of Internet firms influence their internationalisation process?”. Design/methodology/approach The authors answer this question using three cases illustrating the internationalisation process of three pure play digital service firms, each falling into one value creation logic. Findings Each case company had a different approach to internationalisation, explained by a different theory. The firms differed in what their motivation was to internationalise, how they dealt with their liability of foreignness and how they learnt to internationalise. The differences were consistent with the specificities of their value creation. The contribution of this paper is to take the first steps towards linking the way firms create value with their internationalisation. What theory best explains the internationalization of IFs seems contingent on what firms do. Practical implications The message to practitioners is that international strategy not only can but also needs to be different across firms. It needs to be tailored to the concrete way a firm endeavours to generate and capture value. “One strategy fits most” is unlikely to succeed, because different value propositions demand different approaches to realising them. Originality/value In extant literature, IFs have been treated as one group, albeit distinct from “offline” firms. This paper proposes that the value creation process of IFs causes them to differ from each other, just as much as they differ from traditional firms.