Configuring value for competitive

advantage: on Chains, Shops and

Networks

Magdalene Benil
h2924
 Introduction of the article

Background of the typology

Contents
Thompson’s Typology

Value chain analysis

Overview of alternative value

configuration
Introduction
Strategy can be defined as the art of creating Value. Although, Strategy is and will largely
remain an art, it is directed at contributing to the development of the science of value
creation.

The basic gist of the article is that:

 To propose a typology
 Of alternative forms of value creation
 To explore how firms differ in a competitive sense.

Configuring value for competitive

2023 advantage: on Chains, Shops and 3
Background of this typology

Porter’s five forces analysis

 Limitation: It was difficult to assign and analyse activities in terms of
the five generic primary value chain categories

Configuring value for competitive

2023 advantage: on Chains, Shops and 4
James D. Thompson
(1967)
Typology

Value configuration model

 Three generic value configurations
Objective: To understand firm-level value creation logic across a broad range of
industries and firms.

Value Chain

Value Shop

Value Network
 Value Chain

Value Shop

Value
Network
2023
 Value chain analysis
 It is a method for decomposing the firm into strategically important
activities and understanding their impact on cost and value.

 Introducing three distinct value configurations leads us to propose that

value chain analysis needs to be transformed into value configuration
analysis.

 Value configuration analysis is defined as an approach to the analysis

of firm-level competitive advantage based on a theory of three value
creation technologies and logics.

Configuring value for competitive

2023 advantage: on Chains, Shops and 8
Thompson’s Typology Of:

1. Long-linked Value chain

2. Intensive Value shop

3. Mediating technologies Value network

Configuring value for competitive

2023 advantage: on Chains, Shops and 9
 LONG-LINKED – VALUE
INTENSIVE – VALUE SHOP
CHAIN
o Value chain models the o Value shop models firms
activities of a long- where value is created by
linked technology. mobilizing resources and
o Example: assembly activities to resolve a
line-based particular customer problem.
manufacturing o Example: Professional
services
Configuring value for competitive
2023 advantage: on Chains, Shops and
MEDIATING TECHNOLOGIES –
VALUE NETWORK
o Value network models firms that
create value by facilitating a
network relationship between their
customers using a mediating
technology.
o Example: Telephone companies,
insurance, postal services.
10
 Chain Shop Network
Value creation logic Transformation of inputs Resolving customer Linking customers
into products problems

Primary technology Long-linked Intensive Mediating

• Inbound logistics • Problem finding and • Network promotion and

Primary activity • Operations acquisition contract management
categories • Outbound logistics • Problem-solving • Service provisioning
• Marketing • Choice • Infrastructure operation
• service • Execution
• Control/ evaluation

Business value
systems structure Interlinked chains Referred shops Layered and interconnected
networks

Overview of alternative value

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configuration
Thank you