Managing Value

internally and externally

Value Exchange

Firms offer value to different types of counterparties in different markets…..

  • customers in markets for goods and services;
  • personnel in the labor market;
  • business partners in the markets for distribution and suppliers; and
  • investors in the capital market;

.... from whom the firms receive an equivalent value in return:

  • equivalent in quantity: the same material and immaterial value in total
  • equivalent in quality: the same dimension of value

The value inputs from the counterparties - or "parties" for short - constitute the material and immaterial means for the firm's operations, i.e. the wherewithal for the firm to generate value.

Thus there is a cycle of equivalent value exchange on markets between the firm and its parties: the value inputs are utilized by the firm to its benefit in order to generate value offers, the benefits of which for parties call forth further value inputs, leading to yet more value offers, and so on.

Firms offer value to counterparties in each dimension of value, which is shown below for consumers (C), personnel (P), suppliers (S) and investors (I).

In return for the value offer, firms receive the value input from customers, personnel, suppliers and investors in the same dimension of value, as shown below.