Value Co-Creation in Industrial Buyer-Seller Partnerships ... - Doria

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argumentation alters the traditional notion of buyers always preferring low prices and sellerspreferring high prices. The starting point in their argumentation is that companies do notexist for themselves, but they exist to serve others. Business is about exchange and therefore“ business economics is primarily related to revenues and costs of exchange” (Ibid, p 9). Theprocess of exchange consists of transactions between the buyer and the seller. Transactionsinvolve both primary and secondary costs and primary and secondary revenues for both thebuyer and the seller.The primary revenues for the seller relate to the price paid by the customer and thesecondary revenues appear in the form of increased revenues or decreased costs. Primarycosts are costs for production, distribution, and relationship handling. The secondary costsare increased costs in other relationships or in internal operations. As illustrated by theabove discussion price is a crucial element in economic exchange. However, the price in asingle transaction cannot reflect the total economic conditions of buyer and seller. Priceonly represents a part of the primary costs for the buyer and primary revenue for the seller;several other costs and revenues are also affected. In the same way as it is impossible toconsider all the benefits and sacrifices of a relationship, it is impossible to evaluate all thepotential costs and revenues of a transaction. What will be considered and taken intoaccount depends on the subjective perceptions of the actors involved. The actors evaluatethe situation by using a chosen logic.Price is only one aspect of the economic outcome of a business relationship. The mainissue is how price is related to other cost and revenue components. How price is seendepend on the economic models i.e. the logic used. As industrial buyer seller relationshipsare characterized by interaction over time, the offering and the process of exchangedevelops. This means that the logic for pricing also changes. “ Pricing becomes aninteractive matter” (Gadde et al. 2002, p 14). The change that happens in the relationship asthe exchange process evolves requires that both buyer and seller jointly evaluate costs andrevenues of different alternatives. “ In this way price and pricing are inherent dimensions ofexchange rather than something decided by the seller” (Ibid, p 14). Through exchange overtime the cost and revenue structures and how they are perceived are affected. When a buyerperceives its primary revenues in new ways by reconsidering the value of what suppliers canoffer, the buyer changes the perceptions also of primary costs and secondary effects.3.5 Relationship benefits and costsGadde and Snehota (2000) discuss supplier relationships. They argue that although theeconomic consequences of making use of supplier relationships are difficult to assess and53
the value of the asset is context dependent, supplier relationships are one of the mostimportant assets of a company. The value of a relationship cannot only be judged by itsproduct or service content. Some relationships are valuable because of the volume ofbusiness that they represent. Other relationships are valuable because of the future potentialthat they represent, in the form of technical development and product quality andperformance. Gadde and Snehota discuss benefits and costs of supplier relationships. Costsare direct procurement costs, transaction costs, relationship handling costs, and supplyhandling costs. Benefits in turn are divided into cost benefits and revenue benefits. Thedegree of involvement in a relationship should correlate with the consequent positive tradeoffbetween relationship costs and benefits. This means that pursuing a high-involvementrelationship with a supplier is sensible only if the benefits of the involvement outweigh thecosts. "!$#&%'(§*)W¥G¥ 9!'X#ZYW[\0§*)+ ,.-0/214365879/2:43(;/1*?@5A3:9B§5CB++ ]W:9B65_^@1*?N1Nà- 5CB++ ,.-0/214365A5D/2E*?FBGEF35H- :I?J3:9B65KB++ BGENb-0?FS"Bc-0?d3G:9B65KB£:F`':I7N1/2EN5D- :*?+M /21*M EN5K1FQe5K:e3:*M M E*^@:*/2EF5D- :*?>`f:*/+ L*1*M EN5D- :*?FB(O9-07POFE?FQIM -R?FST3:9B65KB+1FgFE*=T79M 1hC:-0?@5i79/2:4Q*;4365Q91Fb41M :*7"=>1?@5Hj'-R?@5K1FSI/aEF5a1FQM + U;7"79M V&ONE*?NQ M -R?NSP3G:"B§5CB+M :9S*- B65H- 3kB M+ L*1Nb41?9;F1&^@1?N1Fà- 5KB++ BG:*M ;N5D- :*?FB£5DOFEN58-0?N3(/219E4BG1/21Nb41?9;F1+- M -R?"lk14QT5a:&7"/
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Birgitta ForsströmValue Co-Creatio
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VALUE CO-CREATION IN INDUSTRIAL BUY
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CIP Cataloguing in PublicationForss
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Suokannas and Annica Isacsson my de
Page 9 and 10: 3.3 The use of the value concept in
Page 11 and 12: 7.2.1 Price as a benefit and a sacr
Page 13 and 14: Figure 8.1: Interdependence, involv
Page 15 and 16: 81. INTRODUCTIONEconomic theory rel
Page 17 and 18: Portfolio management and key accoun
Page 19 and 20: value - ways to understand and thin
Page 21 and 22: creation in a world of relationship
Page 23 and 24: Möller and Halinen-Kaila (1999) cr
Page 25 and 26: Value of a Relationship: When discu
Page 27 and 28: 1.3 Outline of the studyThe study s
Page 30 and 31: in such relationships, and on how t
Page 32 and 33: 2.2 Research approach“ Human gras
Page 34 and 35: “ In case study both the research
Page 36 and 37: interview ended up being different
Page 38 and 39: simplifying and combining observati
Page 40 and 41: the purpose of why it is studied an
Page 42 and 43: started paying attention to issues
Page 44 and 45: The analysis of the material was an
Page 47: are: setting the boundaries of the
Page 50 and 51: Critical events during the process
Page 52 and 53: interviewing, observing, reading, r
Page 54 and 55: unit. Going even further back in hi
Page 56 and 57: 3.4.1 Overview of the use of the va
Page 58 and 59: ç-è1éWèê9ë ì9í!î¹ï5ðWí
Page 62 and 63: zG{\| }C~t s oHpaqfrRs t s qXu2vs y
Page 64 and 65: industries. Innovation is the sourc
Page 66 and 67: ôô3.7 SummaryThe assessment of va
Page 68 and 69: 4. A RELATIONAL APPROACH TO VALUE C
Page 70 and 71: est way to organize, any way of org
Page 72 and 73: 4.2 The IMP view on relationships a
Page 74 and 75: The focus and unit of analysis of t
Page 76 and 77: ecent book discuss how creating val
Page 78 and 79: not simply mutual dependence betwee
Page 80 and 81: 3n3465-7 89;:=©:¡?@95AB
Page 82 and 83: interdependence is associated with
Page 84 and 85: “ The performance of supplier arr
Page 86 and 87: Figure 4.5: Different value creatin
Page 88 and 89: “ organizational arrangements tha
Page 90 and 91: There is no simple or universal def
Page 92 and 93: The question of win-win in partners
Page 94 and 95: The following chapter, number five,
Page 96 and 97: The world cruise industry is domina
Page 98 and 99: Figure 5.2: The actors and the setu
Page 100 and 101: ù õ ñ ù õ ó*ÿ¡ ÷£¢ ñ¤
Page 102 and 103: :: ]:: ]In normal cases the Seller
Page 104 and 105: the top 10 suppliers for the cruise
Page 106 and 107: 6. THE DEVELOPMENT OF THE RELATIONS
Page 108 and 109: In 1997 when Mr BR9 got the positio
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The relationship between the compan
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” He (BR9) often talks about the
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With some years of experience with
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offering, the Buyer still sees the
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When the Seller realized that they
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we have a new development in the pr
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to serving the customers - the part
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” This is the most problematic ag
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• Optimize operations i.e. fuel o
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They also commented that the person
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6.7.5 Comments on internal issuesAt
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changes, and that the Seller would
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survey 14 that the Seller had condu
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uuuuuuu uuuuuuuuuuuuuuue¦f¨gh ijk
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Seller. At present there are three
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15 - a factor that should not be ne
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elationship and the people interact
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+ K !ñ ú ê ñ ê ö ë î ñ ï
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7.1 Perceived value as a prerequisi
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” We are in the process of develo
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and that is insane. We must be able
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è èèèè èèèè èè èè èè
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We learn their way of handling thin
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Price receivedThe price received ca
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partnership with the Seller, the as
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In the light of this, one could say
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dependence. If managers were not ab
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¥(¦§¨&©G§ªG¦(£(«¬¨$Z
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Seller’ s products and concepts,
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forth between the companies. This h
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What I found even more interesting
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The Buyer sees that the interest fo
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decision to pursue a collaborative
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methodology. I will also direct som
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years to come. Consequently the par
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€‚ƒ‡ ˆ„~„| }~different
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Question 1: How is the value concep
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exists, the value co-creation poten
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partnering and cooperating are so o
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process of analyzing the material s
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Barney, JB. (1991). Firms resources
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Forsström, B., (1998). Trouble & S
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Katz, M & Shapiro, C (1985). Networ
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Shapiro, B.P., Rangan V.K., Moriart
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Interviews:Interview: Buyer 1Interv
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Relationships between buyers and se
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