Value Creation in International Business

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In any business, value creation is an utterly essential concept as it is the foundation of profitability. Applying value creation on a global scale presents an interesting combination of challenges and opportunities that ultimately offer superior profitability if those challenges and opportunities can be met with a sound strategy. One of the strategic elements that the Hill (2013) text touched on briefly that serves to strengthen an international business’ profitability in either global or domestic markets is what the Blocker, Flint, Myers, and Slater (2011) article referred to as proactive customer orientation. This approach to marketing and development has been shown to be more effective than almost any other element when it comes to creating value and should be at the very least considered, if not implemented by any business hoping to remain competitive.

There is no question that being aware of customer needs and desires is the key to creating value for a business’ product or service. Hill (2013) explained that “Through brand positioning and advertising, the marketing function can increase the value (V) that consumers perceive to be contained in a firm’s product” (p. 422). The question is exactly how responsive a company has to be to maximize this avenue of value creation. Using market information to actually inform the development of new products instead of simply being reactive is an option presented, though not thoroughly explored by Hill (2013, p. 422).

While every business has to consider for itself if this kind of market interaction is really the best option for creating value, studies have been conducted that strongly support it. Blocker et al. (2011) explained: “The results of our study provide strong evidence that proactive customer orientation is a cross-culturally valid and strategically important capability for value creation” (p. 229). The fact that this method works cross-culturally is of immense importance to the foreign relations of any business acting on the global scale, which most business should once they have the capability to do so. Conducting business globally offers a workaround for the limits of segmentation in that “it is normally impossible to segment the market to such a degree that the firm can charge each customer a price that reflects that individual’s assessment of the value of a product” (Hill, 2013, p. 419). By offering the same product to vastly separate consumers, both geographically and culturally speaking, there is a greater opportunity to maximize value creation for that product because it is easier to segment population groups and so find areas where a product is worth much more, increasing its overall profitability for the company.

The reason that proactive customer orientation dovetails so nicely with the increased segmentation opportunities of global business is that is shown to be so universally effective. Blocker et al. (2011) found proactive customer orientation to be effective in five different major country markets while other, more conventionally accepted methods of value creation fell short in some or even most of the markets considered (p. 226). This kind of versatility makes it a better investment in terms of time and resources for a company looking to maximize its value creation. Even the most commonly accepted method of value creation, offer quality, was shown to be inferior to proactive customer orientation (Blocker et al., 2011, p. 227). Though these findings were drawn from a single study, they were corroborated by other studies cited throughout the Blocker et al. (2011) article.

While the strategy is and always should be an individual choice for each and every company, it is important that all methods for value creation are on the table from the beginning and as the target market changes. The resounding success of proactive customer orientation and the common-sense implications of the internet age for this style of value creation make it well-worth considering if not universally implementing. The only thing better than responding to consumer demands is successfully anticipating them.

References

Blocker, C. P., Flint, D. J., Myers, M. B., & Slater, S. F. (2011). Proactive customer orientation and its role for creating customer value in global markets. Journal of the Academy of Marketing Science, 39, 216-233. 

Hill, C. W. (2013). International business: Competing in the global marketplace (9 ed.). New York: McGraw-Hill Irwin.