What Is Value Capture?
Value acquisition refers to the fact that an enterprise makes profits through its attractive value positioning through the correct mechanism. What it wants to solve is the question of "Where does the company make profits? How to make innovative profits?"
Value acquisition
Right!
- Chinese name
- Value acquisition
- Definition
- The fundamental problem to be solved by the source of income is the enterprise
- Core
- The income model can be broken down into the following elements
- Explanation
- Income source refers to the content by which an enterprise obtains income
- Value acquisition refers to the fact that an enterprise makes profits through its attractive value positioning through the correct mechanism. What it wants to solve is the question of "Where does the company make profits? How to make innovative profits?"
- Value acquisition includes the following three elements. [1]
- Cost management refers to the way in which an enterprise manages costs and optimizes its assets. The problem it needs to solve is how to implement cost structure and cost control in the activities of value creation. Cost management consists of the following two elements.
- 1) Cost structure
- The cost structure refers to the arrangement of the company's own cost elements. For enterprises, operating activities generate many different cost elements, including production worker wages, fuel costs, raw material costs, advertising costs, marketing staff salaries, workshop management costs, factory management costs, research and development costs, and technical service costs. The enterprise should determine which factors in the value content provided are above the industry standard and which factors are below the industry standard, so as to determine its own cost structure. In order to make the flight economic and convenient for car travel, Southwest Airlines does not invest too much in the choice of travel dining, business class lounges and seats, but emphasizes friendly service, speed, and frequent point-to-point direct flights. This characteristic has changed the long-term high cost structure of the aviation industry and stood out.
- 2) Cost control
- Cost control refers to the reduction of costs incurred by an enterprise. There are three main methods:
- Eliminate inventory. The first condition for inventory reduction is accurate customer demand information and accurate, real-time information of available components and raw materials; followed by reducing product complexity. Generally, 10% of the company's total product line can meet the needs of 90% of customers, and the remaining 90% create complexity, occupying space and funds in the form of inventory; and finally relying on standard parts to make the original equipment use the same parts , Eliminating production fluctuations of upstream suppliers, reducing the cost of parts and inventory of the entire system. In addition, consolidating inventory and improving supply chain reliability are important measures to reduce inventory.
- Effective management through digitalization, which includes developing digital customer interfaces and optimizing electronic order processes.
- Growth without capital. Financing is an eternal topic for corporate growth. In order to address the company's needs for liquid funds and fixed assets, make full use of the partners' resources. Some use suppliers 'assets, scale and experience to reduce their demand for liquid funds and fixed assets; some use customers' resources. Taking Suning as an example, it did not make short-term loans from banks, and its liabilities were mainly short-term liabilities. Therefore, it can be inferred that the company's new store funds are mainly derived from the use of "the difference between turnover days and account days" to win the financial income of cash flow, occupying supplier funds. This not only provides financial guarantee for its rapid expansion, but also saves a lot of interest costs.
- 3 Value innovation
- Value innovation refers to the search for new value creation logic. The problem it needs to solve is: how to open up a new market space and realize profitable growth. In more and more industries, competition is fierce, while demand has grown slowly or even stagnated. To achieve profitable growth, companies must shift their focus from the supply side of the market to the demand side, and shift from focusing on and surpassing competitors to providing value to buyers. By looking at the market across existing competitive boundaries, and screening and reordering buyer value elements in different markets, it is possible for companies to rebuild the market and industry boundaries, opening up huge potential demand, and thus getting rid of the "Red Sea" (known market space) Create a "blue ocean" (new market space), as shown in Table 1.
- Table 1 Comparison of value creation logic between the "Red Sea" and "Blue Ocean"
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- To break the trade-off between differentiation and low cost, create a new value curve. W. Chan King and Renee Mobone proposed a four-step action framework.
- (1) Elimination: refers to the removal of those elements that are taken for granted in long-term competition, but no longer have value, or even reduce value.
- (2) Reduction: check whether the existing product or service is over-designed in functionality, which exceeds the customer's needs, and suddenly increases the cost of the enterprise without producing good results, reducing it to below industry standards.
- (3) Increase: Increase the content of these elements above the industry standard based on the fundamental changes in the value that customers value.
- (4) Creation: Reconstruct the buyer's value element, provide the buyer with a new experience, and reduce the cost of the enterprise itself. Through the above four actions, companies are encouraged to change the elements of competition, thereby making the existing competition rules irrelevant and creating new requirements.