Classroom Companion: Business

8.3 
 Value Shop
Definition 8.2
The value shop is a problem-solving organization such as consultants, health ser-
vices, engineering companies, and architects.
Value shops earn more money the better and faster they can solve a problem. Their 
most important competitive market force is their reputation. Shops may exist 
within networks or chains. Some examples are the advertisement department of 
newspapers, the consultative sales department of telecommunications operators, 
the R&D departments of the pharmaceutical industry, the design departments of 
 
Chapter 8 · Value Creation Models and Competitive Strategy

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automobile manufacturers, and the pilot-training centers of airlines. The shop 
may, of course, be outsourced to independent companies. For instance, the news-
paper may outsource all its advertisement activities, including small ads.
Universities and schools are also value shops, as they perform research, teach-
ing, and innovation. All these activities are problem-solving tasks; the researcher 
must find solutions to new challenges, and the educator must adapt and develop 
their teaching to target a specific group of students. Reputation is the most impor-
tant market force for both activities.
The value shop is illustrated in 
.
Fig. 
8.2
. The value shop receives problems 
from its customers and solves them using its internal competence and experience 
from previous projects. The value shop may also draw upon external resources to 
solve complex problems requiring specific expertise that the value shop does not 
have. After solving the problem, a solution is presented to the customer. The value 
shop will then evaluate its performance and solution and build experience. Clever 
solutions will also contribute to the reputation of the value shop.
Value shops depend on customers or clients who have problems they cannot 
solve themselves. There are several mechanisms allowing a value shop to solve 
problems better or faster than the client himself, including:
5
The shop knows more about the problem than the client.
5
The shop possesses specialized methods to deal with the problem.
5
The employees are expert professionals in the relevant field.
5
The shop can form flexible project teams and is able to reorganize quickly to 
solve new problems.
Value shops compete to attract clients with problems to solve. Competition among 
value shops depends not only on price but also on reputation. A lawyer with a 
good reputation can take higher fees for consultations and still get more clients 
Evaluation
Customer
solution
Administration
Solution
Problem solving
Customer with
unique problem
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2
3
4a
4b
. Fig. 8.2 The value shop. (Authors’ own figure)