The Value Matrix and Its Evolution

`What rcally Matcrs in Opcrations Managcmcnt Procccdings of thc Europcan Opcrations Managcmcnt Association,
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Intcrnational Annual Confcrcncc Bath Junc 3-5, 2001, Editors: K. Blackmon, S. Brown ct al., Jol 1, pp 118-130
Jcronica Martinc: 1 29/03/2001
THE VALUE MATRIX AND ITS EVOLUTION.
Veronica Martinez and Umit Bititci
Ccntrc for Stratcgic Manufacturing
DMEM, Univcrsity of Strathclydc, Glasgow, U.K.
e-mail: v.martinezstrath.ac.uk
Abstract.
This paper proposes a Iramework that oIIers a set oI guidelines on how an organisation could align,
direct, and manage its capabilities to create and manage value. The value propositions directly
align the corporate objectives and core competencies to the customer`s expectations. T he six value
propositions oI the value matrix have evolved creating the value cube. The paper addresses three
case studies. The Iirst two cases illustrate the importance oI using the correct units oI analysis. The
last case demonstrates the use oI the valu e cube to achieve the value proposition that the
organisation wants to be to create value.
Introduction.
The real pressure in the new economy is to create value Ior shareholders, customers and
employees. (Larrache 2000) Consequently, old and new business es are redeIining their value
propositions and core competencies. It is here that Value management helps to direct companies'
knowledge to maximise added value IulIilling speciIic customer's needs (Porter 1985).
The research explains how and why the Value Matrix was created and how it evolves and shows
the use oI the model on diIIerent units oI analysis. This paper provides a better Iramework to
describe organisations according to diIIerent types oI markets, their core competencies and
knowledge, and their value orientation, demonstrates through three case studies the use oI the
matrix and value cube, and documents the learning that ensured.
Background.
In 1971, Ingham introduces one oI the most signiIicant business classiIications in the history oI
strategy. This is built on the basis oI manuIacturing, operations, market Iorecast and sales. By
contrast, Miles and Snow (1978) keep Iocus on manuIacturing operations and stress on
management styles and order winners. In Iact, Miles and Snow`s classiIication o pens a new door in
business classiIications addressing market issues, such as order winning criteria, although this does
not mean that this criteria IulIils the customers` expectations. Seven years later Richardson (1985)
developed a classiIication in the electronic sector Iollowing new basis, such as design, innovation
and customer`s service. Richardson similarly to Ingham (1971) and Miles and Snow (1978), used
some manuIacturing and operations parameters stressing on the Ilexibility and costs. Richardson
was the Iirst to introduce the concepts oI product innovation and R&D.
The DTI (1994) in its classiIication shares the same manuIacturing -operations basis as the previous
authors, even though the DTI`s classiIication is enriched with the addition oI mark et requirements
and distribution parameters. The market approach adopted by the DTI diIIers Irom that oI Miles
and Snow. The DTI introduces the market demand as new criteria to classiIy organisation, although
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this is done in a superIicial way. This introdu ction oI the market demand is a contribution to the
scope oI the previous business classiIications.
In the same year that the DTI launched its classiIication, Miles and Roth (1994) came up with a
new one. Their classiIication is built on the basis oI the role oI technology in operations linked to
the market needs. The success oI this classiIication resides on the development and link oI three
diIIerent types oI markets within their classiIication. This is the point oI departure Irom the
classical business classiIication mainly oriented to manuIacturing without a strong relationship to
the market needs. This approach gives a new panorama Irom a market -operations perspective.
In 1996, Treacy and Wiersema introduced a new classiIication Iollowing the same ba sic principles
oI Miller and Roth (1994) enriched with a new parameter, customer -service. This classiIication
integrates operational issues (including technology), market and the customer`s point oI views.
This new classiIication is Iocussed on customer`s expectations as well as on business results.
1985
Richardson
1971
Ingham
1978
Miles&Snow
1994
DTI
1994
Miller&Roth
1996
Treacy &W.
1cchnological
Fronticrsmcn
Prospcctors 1cchnological
Lcadcr
Innovators Product Lcadcrs
1cchnology Exploitcrs Flcxiblc Entcrprisc
1cchnological
Scrviccmcn
Customiscrs 1ypc IJ 1otal Scrvicc
Entcrprisc
Carctakcrs Customcr
Intimacy
Cost- Minimising
Customiscrs
1ypc II
Cost-Minimiscrs 1ypc I Dcfcndcrs Elastic Entcrprisc Markctcrs Op. Exccllcncc
1ypc III
1ypc III a
1ypc III b
1ypc III c
Analyscrs
Rcactors
Jirtual Entcrprisc
Table 1 Comparative table oI the diverse types oI business classiIications.
Having analysed diIIerent trends over time it is obvious that three diII erent types oI business
models have predominated. Table 1 compares diIIerent types oI business classiIications proposed
by other authors against Richardson`s classiIication. There is a consistency over time that the
majority oI authors have a business clas siIication type equivalent to Richardson 'cost minimisers
Iollowing the same basis. 'Cost minimisers are equivalent to (even iI not the same as)
'deIenders, 'elastic enterprise, 'marketers and 'operational excellence. These stress on
producing high volumes at low prices. In 1971 Ingham initially introduced as 'type IV, the basis
oI Richardson`s 'customisers type (1985). This business type was Iollowed by the DTI and
continues to be used by Miller and Roth (1994) as well as, Treacy and Wiersema`s (19 96)
classiIication. 'Customisers businesses tailor products/services to IulIil particular customer`s
needs. The equivalents to 'customisers are 'total service enterprise, 'caretakers and 'customer
intimacy enterprises. Finally, the basis oI 'technolog ical Irontiersmen`s type was initially
introduced in 1978 by Miles and Snow as 'prospectors and continues to be used by the DTI
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(1994), Miles and Roth (1994) and Treacy and Wiersema (1996). 'Technological Irontiersmen
businesses look Ior continuous inno vation oI design and its equivalents are technological leaders,
innovators and product leaders, its equivalents are 'prospectors, 'technological leaders,
innovators and 'product leaders. From 1994 Miles and Roth and Treacy and Wiersema (1996)
have Iollowed the same basic theory oI their three main classiIication`s tendencies. These
tendencies give particular and clear characteristics to deIine each business type.
The Miller and Roth classiIication (1994) was the Iirst one to Iocus on the three most
representative types oI market, i.e. innovations, tailored products, high quality products at a
conscientious price. Even though Miller and Roth (1994) made this substantial contribution on the
types oI markets, they delivered it on the typical operational ma nagement way.
Treacy and Wiersema`s classiIication (1996) Iollows the similar basis oI Miller and Roth`s
classiIication (1994); although, Treacy and Wiersema deliver their classiIication Iocussing on the
market types 'on three diIIerent propositions oI va lue (products diIIerentiatiors) to the market.
ThereIore, they introduced the word 'value proposition.
The value propositions identiIied by Treacy & Wiersema (1996) and Miles and Roth (1994) are
applicable to conventional businesses as well as new busin esses operating in global markets.
Martinez research (1999), based on empirical evidence, has Iound these classiIications very limited
in scope and Ilexibility. Organisations using these classiIications may miss some characteristics
and competencies critic al to their businesses. Let us illustrate the gap Iound in Treacy and
Wiersema`s classiIication with an example. Intel and Highland Spring are considered Product
Leaders. However, Intcl is a Product Leader because it delivers new products, new designs and
innovations year aIter year, whereas , Highland Spring is also a Product Leader because it manages
its brand image very well. We notice that there are two diIIerent approaches (types oI business)
sharing the same value proposition. The logic leads us to thi nk that product leaders comes in two
Iorms, 'hard Iorm represented by new designs, innovations, etc. and 'soIt Iorm Iocus on brand,
market, etc.
The Value Matrix.
The Value Matrix (Martinez 1999) presented in this section extends the existing classiI ications oI
value propositions and classiIies diIIerent types oI organisations according to the diIIerent types oI
markets, which at the same time reIlect diIIerent business strategies. The value matrix provides a
better Iramework to describe organisations , their core knowledge, value drivers, resources`
orientation, customer Iocus and general strategy; by introducing two value dimensions 'Hard and
SoIt to Treacy and Wiersema`s original value propositions (1996). (Table 2)
Hard vs. Soft Jaluc.
The diIIerentiation between Hard and SoIt Value underpins the applicability oI technology,
research and development, marketing, sales and service management, in order to serve current and
Iuture needs oI a complex market (Martinez 1999). Hard Value is Iocused on con tinuous creation
oI technology on products and processes, innovations, new designs, improvements, etc. In contrast,
SoIt Value is more Iocused on the organisation`s marketing image and management. SoIt Value
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stresses into psychological perceptions 'intangi ble things most oI the cases are intangibles, e.g.
management, brand image, people`s Ieelings, simplicity to deal with, customer attention, etc.,
whereas, Hard Value Iocuses on 'tangibles things that the organisation can easy measure, e.g.
innovations, product customatisation, price saves, etc. For these reasons, Hard dimension is called
the actors oI technology breakthroughs and the SoIt is called the creators oI image. Until this
moment, Hard and SoIt value are not validated, there are still proposition s. Table 2 explains the
diIIerence between Hard and SoIt value though diIIerent parameters.
Parameters
Hard Value
Actor of tcchnology brcakthrough
Soft Value
Crcators of imagc pcrccption
Human
Resources
It requires a technological
backgrounds. It under pins in
design, operations and
technological improvements.
SoIt value demands creative
people in marketing, sales and
management.
Research and
Development
It demands high levels oI
investigation; research and
development, continuous
generations oI technol ogy,
innovations, and new designs.
It demands research and
development on image creation,
new concepts to sell
products/services.
Core
competence
Hard Iocuses their resources and
competencies toward one
direction. 'They are the
specialists in one area or even
sometimes in one thing'
Their core competence resides in a
mix oI talents and capabilities
1echnology They have the capacity to create
new technology in products and
processes.
They do not create new
technology, they only make use oI
the existent technology.
Knowledge
generation
'Fresh ' developers oI
technological knowledge with
high quality and applicability
Their technological knowledge
generation is limited to people
management and tacit knowledge,
including knowledge learned Irom
customers and market.
Table 2 Hard vs. SoIt Value.
Some authors support these propositions in diIIerent ways. For instance, Gary Wilson (Willigan
1990) vice president and CFO oI Disney states that value creation comes as a result oI an excellent
marketing creati vity. Julia Collins (1989) in her article "Image and Advertisement" emphasises on
advertisement management to create value. On the other hand, Kim and Mauborgne (1999) state
value innovators create new and superior value through design. Wilson and Collins, one way or
another, support the soIt value creation and Kim and Mauborgne supports the hard value creation.
The research leads us to the logic that Hard and SoIt Values operate in completely diIIerent
markets. The SoIt Value`s market is based on marketin g, image, prestige, to Ieed some Ieeling,
such as ego, superiority, to bridge a relationship with the customer Iirm. Hard Value`s market is
building a direct relationship, customer technology, because, they create and use the technology
to serve the current and Iuture needs oI complex markets, directing all their resources towards one
direction-tcchnology (proccss/ product).
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Elcmcnts of thc Jaluc Matrix.
The Value Matrix is structured taking the value propositions Irom Treacy & Wiersema (1996)
along with the addition oI the two value dimensions, 'Hard & SoIt. The result oI this combination
is a two by three matrix as illustrates Figure 1. Consequently, this generates six value propositions:
Innovators, Brand Managers, Price Minimisers, SimpliIiers, Te chnological Integrators and
Socialisors.
The elements oI the Value Matrix are analysed Irom two diIIerent perspectives. Table 3 illustrates
both perspectives, customer perspective as 'customers get and company perspective as 'company
need to do.
Figure 1. The Value Matrix
Prahalad and Hamel (1990), Porter (1985) and Larreche (2000) agree that every company has to
Iocus their resources on one objective. Tracy and Wiersema (1996), as well as Miler and Roth
(1994), support the same theory, although, in diIIerent words. All these authors sustain that
companies have to Iocus on one value proposition that it alone can deliver to a select market. The
corporate objective oI each value proposition (Table 3) gives the alignment between customers
expectations and the key operative elements that the company has to build, in order to cope with
the speciIic market demands. Figure 2 shows some illustrations oI the value matrix.
|arc 3cl|
New VaIue Dimension
Prccuc|
Leacers||p
0pera||cra|
Exce||erce
Cus|crer
lr||racy
O
r
i
g
i
n
a
I

V
a
I
u
e

P
r
o
p
o
s
i
t
i
o
n
s
|nnovators
VALUE HATR|X
rand
Hanagers
Pr|ce
H|n|m|sers
8|mp||f|ers.
8oc|a||sors Techno|og|ca|
|ntegrators
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Value
Customers get Compuny need to do
Proposition Strategic Objectives Operative Objectives
Innovutors
new innovative
designs, products never
seen beIore.
Provide breakthrough
through generations oI
continuous new designs,
new Ieatures within
technological basis
Long-term vision, robust
R&D and product
development, capacity to
innovate within short product
liIecycles.
rund
Munugers
status Irom the product,
they get liIestyle, a
Ieeling oI superiority.
Expand the market
reinIorcing the solid brand
image oI the product and the
company.
Superb brand recognition.
Focus market sector. Superior
control over the product
styles, quality and promotion.
Price
Minimisers
ordinary, reliable
products and services
at lowest price
possible. They get
security on the product.
Production growth reaching
high quality levels in the
most cost-eIIective way and
waste Iree.
Strong order IulIilment sustain
by eIIicient and eIIective
production processes within
tight quality processes
controls
SimpIifiers
convenience and
availability oI the
products. Hazard Iree
experience.
Building streamlined
processes to make liIe
simple and un-complicated
Ior customers in a novel and
proIitable way.
Strong availability. Superb
order IulIilmentdistribution
by conventional and un-
conventional resources
(networking, IT, etc.)
TechnoIogicuI
Integrutor
tailored products and
services. They buy
total solutions.
Tailor speciIic and
continuous solutions Ior
careIully selected customers
on the basis oI permanent
relationships.
Strong relationship with
customer. Knowledge oI
customers` businesses,
products and operations.
Capacity to conIigure any
speciIic need. Able to adopt
the customer`s strategy.
SociuIisors
Ilexible services and
inter-personal
relationship because
they trust in the
company.
Build conIidence and
trustiness on the customers.
Sensitive IulIilment oI
customers` needs supported by
careIul deliver, reliability, and
honesty. Excellent personal
service.
Table 3. Comparative table - what customers get? and what the companies need to do?
Figure 2 Illustration oI the value matrix.
Cus|crer
lr||racy
0pera||cra|
Exce||erce
Prccuc|
Leacers||p
HARD SOFT
lrrcva|crs
- lNTEL - VlCR030FT
- 30NY - 3 V
8rarc Varagers
- |ARLEY 0Avl030N
- NlKE - |l0|LAN0 3PRlN0
Pr|ce V|r|r|sers
- T0Y0TA - CA3l0
- |0N0A
3|rp||l|ers
- AVAZ0N.C0V -EA3Y 1ET
- FE0ERAL EXPRE33
Tec|rc|cg|ca| lr|egra|crs
- l8V - lCl
- R0A0wAY L00l3TlC3
3cc|a||scrs
- 3C3
- |0VE 0EP0T
ThE VALUE HATR|X
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Application of the Value Matrix.
Our research, so Iar, raises a number oI questions. One oI these is the unit oI analysis oI the Value
Matrix. In other words, how do we apply the Value Matrix? There is controversy in this topic. On
the one hand, Treacy & Wiersema (19 96) suggest that companies should Iocus only on one value
proposition. On the other hand, our research suggests that it may be possible to apply more than
one value proposition to one company. T here could be two additional alternative units oI analysis.
The Iist one- the organisation as a complete unit as Treacy and Wiersema (1996) and Miles and
Snow (1978) proposed in their models, the second one - the business units and Iinally the Iunctional
units. Let us illustrate this point with two examples. Companies ` names have been modiIied to
preserve conIidentiality.
Casc Study 1: Distillcrs.
Distillers produce a range oI products. One group oI products is low price spirits, which are sold in
markets where price is the main competitive Iactor. For instance, a bo ttle oI whisky costing 10 is
very competitive and the end user is mainly interested in what is in the bottle rather than the bottle
itselI. One may argue that this product group behaves as a commodity. On the other hand, they also
produce expensive spirit s, which are sold in markets where brand image is more important than the
price. For example, a 50 bottle oI malt Scotch whisky is bought by the end user Ior its product age
and brand. It will be used to 'show-oII to Iriends and colleagues. One may argue that this product
group behaves as a Iashion product.
The Distillers have two operating units. One is the marketing company that is responsible Ior
managing all oI its brands world -wide. The other one is the Iactory where the products are
produced. The objective oI the Iactory is to produce the products as cost eIIectively as possible,
irrespective oI the product. There are three alternative units oI analysis Ior this company:
a). Organisation as a complctc unit. In this case, we would need to decide wh at is the most
appropriate value proposition Ior the Distillers as a whole. We Iound this diIIicult Ior reasons that
will be discussed later.
b). 1wo functional units, i.e. the Factory and the Marketing Company. The Iactory would be
classiIied as a Price Minimiser and the Marketing Company as a Brand Manager. In this case, there
is no conIlict because there are no or Iew new products introduced. ThereIore, the Iactory can Iocus
on operational excellence and cost minimisation and, meanwhile, the marketing c ompany could be
promoting the brand. (Figure 3)
c). 1wo busincss units, i.e. Commodities Business Unit and a Fashion Business Unit. In this case,
the Fashion business unit would be Brand managers and the Commodities business unit would be
Price Minimisers. However, we Iound this to cause a certain degree oI conIlict with the objectives
oI the Marketing Company, which is trying to promote a brand whilst pursuing a low cost strategy.
This does not make sense. Figure 4 illustrates this alternative.
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HAPD SOFT
Product
Leaders
0perat|ona|
Exce||ence
6ustomer
|nt|macy
Marketing
Unit
Factory Unit
N0
60NFL|6T
DIs1IIIets
Figure 3 Distillers working by Figure 4 Distillers working by
Iunctional units. business units.
Casc Study 2: KAS.
This case presents an interesting and diIIerent conIlict. KAS designs, manuIactures and sell s ladies
and gents` garments. KAS produces a range oI products. One product range is the expensive label
(KAS own label), which is sold in markets where the brand image is more important than the price.
On the other hand, KAS also produces low price clothi ng (Contracts). These products are
manuIactured by KAS Ior their customers` own label. Contract products are sold in markets where
price is the main competitive Iactor. The manuIacturing department produces hand made garments
Ior KAS label; this implies th at the production process is slower, low volumes, and high product
variety. By contrast, Contract label operates in a diIIerent way, high volumes, low product variety
and with semiskilled talent.
KAS has two operating units. One is the product development department (design and marketing),
which every season introduces new designs, new materials, new styles, etc. The other is the
manuIacturing department that is embedded in mass production within tight control on variety and
high quality control. The produ ction department tries to reduce production costs as much as the
process permits.
As in the Distillers example, there are also three alternative units oI analysis Ior KAS.
a). Organisation as a complctc unit: As in the Distillers case, we would need to d ecide what is the
most appropriate value proposition Ior KAS as a whole. We Iound this diIIicult Ior reasons that
will be discussed later.
b). 1wo Functional Units: These are the manuIacturing department and the product development
department (marketing & product design). In this case, the manuIacturing department will behave
as price minimiser and the product development department will behave as product leader (brand
managers - innovators). However, here we Iound a certain degree oI conIlict. (Figure 5) The
conIlict starts when the product development department behaves as product leader -brand manager.
The conIlict arises when new products are introduced, continuously aIIecting Iactory eIIiciencies
and undermining the price competitiveness oI the commodit y product.
c). 1wo Busincss Units: KAS label is a Iashion business unit and Contracts is the commodity
business unit. In this case, the Iashion business unit behaves as a Brand Manager and the
commodity business unit as Price Minimisers. (Figure 6) Each b usiness unit manages its own
HAPD SOFT
Product
Leaders
0perat|ona|
Exce||ence
6ustomer
|nt|macy
Fashion
Business
Unit
Commodity
Business Unit
60NFL|6T
DIs1IIIets
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product and production without any conIlict due to the nature oI the Iashion business unit. The
design and marketing department works closely with production, ensuring that new products are
introduced at the right time and qual ity Ior each season. Here production eIIiciencies, although
important, are low priority. The company understands that there is cost associated with the
introduction oI a complete range oI new products Ior each season. On the other hand, the
commodity business unit is Iree to pursue a price minimiser strategy as to reduce product variety
and to ensure that new product introduction tends to consist oI minor changes to existing demands,
eliminating the need Ior extensive production trials. As a result, there i s no conIlict working by
business units.
Figure 5 KAS working by Iunctional units. Figure 6 KAS working by business units.
It is very diIIicult to apply the value matrix to the organisation as a complete unit, because this unit
as a whole does not take into account departmental issues that, combined with some product issues,
could have internal conIlicts. Our conclusion is that there is no right or wrong use oI unit oI
analysis; this depends on the nature oI the business and its organi sation. However, it is clear that
there is more work needed to be done in this area.
Evolution of the value matrix.
The Value Matrix does not present explicitly 'the core capabilities or value drivers oI each value
proposition; thereIore, the Value Matr ix has to evolve to create oI the third dimension. This new
dimension shows a better panorama oI each value driver Ior each value proposition. (Figure 7)
The third dimension oI the value cube gives the general guidelines oI the corporate architecture oI
each one oI the value propositions. This corporate architecture is broken down into Iour categories
'strategy, operations, Iinances, and competitive parameters (Skinner 1978, Hill 1993, Voss 1995,
Platts et al 1985, Larrache 2000, etc.). Each one oI these c ategories is then divided into
subcategories. The research oI the construction oI the third dimension is extensive, and, Ior this
reason, it is out with the scope oI this paper. It is important to notice that the purpose oI the
Iollowing case study is to i llustrate, with an example, the Iunctionality oI the value cube, not to
validate the value cube.
Rcsults of thc casc study.
The research methodology Iollowed a case study, a phenomenological approach supported by data
collection tools (Easterby-Smith et al 1999). This case study was carried out through the
application oI structured interviews and questionnaires at diIIerent organisational levels. The case
study is divided in two phases. Phase one covered business strategy (general policy, human
resources, technology and marketing) and Iinancial aspects. Phase two covered operations (product
HAPD SOFT
Product
Leader
0perat|ona|
Exce||ence
6ustomer
|nt|macy
Commodity
Business
N0
60NFL|6T
XZc
Fashion
Unit
HAPD SOFT
Product
Leader
0perat|on
Exce||ence
6ustomer
|nt|macy
Product
Development
Unit
Marketing
Unit
Manufacturing
Unit
60NFL|6T
N0
60NFL|6T
XZc
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development and production), competitive parameters and some operational issues oI marketing
and technology (Figure 7). The case study is applied to the ABC Group, which designs,
manuIactures and sells apparel similar to KAS.
Figure 7. The value cube (short version).
The data analysis process is summarised in the Iollowing three steps. First, analysis oI the
Company`s resources and capabilities Secondly, position oI th e Company into a value proposition
using the value cube. Thirdly, analysis oI the company`s objective and its alignment oI resources
and capabilities within its value proposition.
The objective oI the ABC Group stresses on proIit growth by the development oI the group as a
global company. At the beginning oI this year, the group has reached the U.S. market and has
introduced its new garment line in Italy, both oI them through licensees. Recently, the group has
been Iocussing on garment designs and a new cr eative director has been employed. For the past
two years the group has been minimising the Iocus on manuIacturing. They have implemented a
new manuIacturing system changing Irom line to cell (quick response, as they call it) with the
purpose oI improving the process Ilexibility and increase the process eIIiciency. Consequently,
gradual changes to standard technology have been introduced. As a result oI these changes, the
manuIacturing workIorce has been reduced and trained to increase Ilexibility oI operat ions.
Although, the workIorce`s skills have been improved, there is still a need Ior technical design.
Every year (summer and winter), the Group introduces a complete new range oI products (2000
products, some oI them are new designs and others have major improvements). Consequently,
Iashion design has to be translated into technical design to Iacilitate the interpretation to
manuIacturing, then each design has to be broken into manuIacturing operations. The translation
Irom Iashion to technical design is I urther complicated as new designs include new styles, new
materials, new characteristics, etc. Design is usually under pressure because they have to ensure
that the product will be on time on the market.
The customer base oI the product is limited to weal thy mature people, the group accepts that the
majority oI its customers buy its products by loyalty, not by its marketing strategy. The company
promotes its products through Iew advertisements on prestigious magazines and by supporting
Royal activities. The group avoids major marketing advertisements due to the limited Iinancial
resources Ior marketing.
Prccuc|
0eve|cprer|
0erera| Pc||cy
Tec|rc|cgy
|urar Rescurces
Var|e||rg lrp||ca||crs
Prccuc||cr
lrp||ca||crs
Marketing Strategy
Sales Mission
Customer Orientation
Mktg. Operations
ManuIacturing Strategy
InIrastructure
Services
Technical Resources
Supply Chain
Corporate Culture
Corporate Objectives
Mission
Vision
Strategy Business
Values (ethics)
Product Strategy
Product Design
Margin
Market share
Operating Costs
Fixed Assets
Customcr
Intimacy
Opcrational
Exccllcncc
Product
Lcadcr
HAPD SOFT
I ,M
P, S,
T I S,
8TRATECY
0PERAT|0N8
F|NAN6|AL
60HPET|T|VE
PARAHETER8
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The data analysis indicates the company is experiencing a transition in its strategy. This Iact is
supported by multiple changes in manuIacturing, workIorc e`s skills, etc. The data analysis reveals
that there are three relevant Iacts to take into account. Firstly - cmphasis on dcsign, the Group
appointed a very well recognised creative director, hired two more technical designers, and
reconIigured the manuIa cturing process to support the production oI detail products. Secondly -
markct dcclincd. As was mention beIore, the main customers are wealthy mature people, but at this
moment the market is declined because, its mature customers are dying. Thirdly product imagc.
The data clearly shows that the company`s objective is to Iocus on the product image.
Looking at these three diIIerent Iacts does not make much more sense; although, the research have
showed that as a consequence oI the market declined, the Gro up wants to move its market to reach
younger customers. For this reason, on one hand, the Group is working hard on building new
designs behaving as Innovators; on the other hand, the Group is pursuing Brand Managcr valuc
proposition. This makes coherence; Iirst oI all, the company has to reconIigure its design Ior
younger people in order to reposition its image on the market. In other words, the Group has to
work as Innovators and then move to be Brand Managers. Being Innovators is a strategic step to
move Irom and consolidate its position as Brand Managers.
Discussions and Conclusions
Few business classiIications address the market as a parameter to classiIy, in the way oI customer`s
perspective, as this study does. The introduction oI a Hard and SoIt dim ension in the value matrix
provides the openness and Ilexibility Ior analysing the value propositions oI traditional and new
businesses. Hard and SoIt Value operates in completely diIIerent markets. The value matrix has a
better comprehension oI convention al and new businesses (including services, e -businesses, etc.)
because it understands the diIIerent types oI businesses, their external environment and proposes
diIIerent types oI values to diIIerent types oI markets. Consequently, the Value Matrix helps to
focus business strategy, to select customers and to narrow operational focus to value creation
in a selected market. Also it can detect some incongruencies and suggest some general
alternatives.
The lesson Irom the two cases is quite diIIerent. Distille rs and KAS are clear examples oI the
applicability oI the matrix to diverse units oI analysis. KAS presents strong conIlicts working by
Iunctional units because oI the impact oI seasonal designs that promotes the destabilisation oI
manuIacturing process. Moreover, KAS` designs are more sophisticated. Thus, their operations are
more complicated, whereas contracts` designs are simpler. Consequently, the cost reduction and
optimisation oI operations are unobtainable. On the other hand, KAS operating by busines s units
do not present any conIlict. Since every business unit works in parallel and every business unit can
prioritise and optimise their resources, even in manuIacturing or image design (whatever the
operation costs are). Meanwhile, although working by I unctional units are meaningIul Ior
Distillers, it is meaningless Ior KAS, and vices versa. The data analysis from the case studies
suggests that there is no right or wrong use of unit of analysis. This depends on the nature of
the business and its organisation. An identiIied constraint oI the model is presented when a
company does not present any conIlict working either by business units or by Iunctional units. At
the moment, the model cannot tell you which unit oI analysis works better than the other.
Turning to the case study oI the ABC Group, the overall intent oI it is appointed to Iollow a brand
management strategy, although there are some issues that the group has not aligned with is value
8
th
proposition. These are the lack oI strong marketing strategy a nd lack oI Iinancial resources to
marketing. In contrast, the brand manager`s objective is Iocussed on the market expansion and
reinIorcement oI the solid brand image oI the company, a Iact that the group is not achieving at the
moment. The Group has to re conIigure its designs (work as Innovator) as a preliminary step to
reach the stage oI Brand Manager. Moreover, the case study Iound that the concept, design and
marketing areas have strong detachment Irom the manuIacturing area and licences. This paper has
demonstrated how the value cube offers a framework that can be used to structure a set of
guidelines on how an organisation should align, direct, and manage its resources with the
value proposition that the organisation wants to achieve to create value.
The next stage oI this research is to validate the value cube and identiIy the Iootprints oI each value
proposition. There is still a lot more Iuture work in this area and one oI the most interesting issues
is the study oI the evolution paths to move Irom one value proposition to another one. Another
interesting issue is How to mcasurc thc corc compctcncics that gcncratcs valuc for thc
organisation, How to mcasurc thc implcmcntation of a ncw valuc proposition bctwccn othcrs.
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MILES R. and SNOW 1978; 'Organisational Strategy, structure, and process; International student edition.
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