Creating Value in an Unpredictable World by Sull & Escobar - Article Example

Creating Value in an Unpredictable World: A Critical Review INTRODUCTION Creating Value in an Unpredictable World is a journal article which has an incredible amount of significance and influence, and which can only be truly and properly understood once a thorough and efficient analyzing and evaluation has been completed. In order to complete this properly in regards to this journal article in particular, there are several things that we are going to have to do. One, we are going to discuss the actual article itself and grasp an understanding of the basics of what it is about, and then we are going to become more specific and do two things in particular in order to be able to understand this article as best as possible: one, the authors of this article suggest that economic theory offers three different ways that firms use to create value, and so we are going to compare and contrast these three approaches, exploring and evaluating the underlying principles behind them; and secondly, we are going to discuss the fact of how in a world that offers such uncertainly and hyper competition that there are things that firms can do in order to ensure that they continue to create value and sustain an advantage over their competition. This study intends to point out the key factors of this article as well as its meaning, as well as research, analyze, and evaluate the broad field of strategy theory in order to provide support for this paper. This is what will be dissertated in the following. CREATING VALUE IN AN UNPREDICTABLE WORLD The journal article Creating Value in an Unpredictable World is one which has a basic purpose which is to inform businesses as to how they can create and maintain value, particularly in terms of the world that we live in today, which is incredibly unpredictable and with this uncertainty comes the fact of how one day competition can be worse off than you, and the next day everything can change right around. The general purpose of this article is to inform people and companies in regards to how they can ‘create value in an unpredictable world’, as we can see from the title of the article, and we can see simply from the title of the article that the authors are rather positive thinkers in regards to the issue, as they are attempting to help others out in this matter. As soon as we begin into this article, we can see that the main point is stated quite clearly, as we see that the introductory paragraph of the journal article is “The purpose of any business is to create value by producing goods or services that are worth more than the cost of the necessary inputs. This value can be distributed in any number of ways, of course, exclusively to shareholders at one extreme or completely to employees at another. In any case, to survive and thrive, every firm must create value. This observation raises a fundamental question: How do companies create value?” (Sull & Escobarl, 2004: 15). Thus we can see that the main idea is expressed in the beginning of the article, and this placement is used in order to clarify details, as the body immediately following begins to discuss the asked question of how companies can create value. There are many advantages that come from this sort of placement which was used, as it leaves us hanging with suspense, eager to find out what methods companies can use in order to create value for themselves. There is a definite plan of organization that is used within this article, and the material is basically categorized, as each subtopic is a different method that companies can use in order to create value for themselves, for instance: ‘Creating value through superior position’, ‘creating value through superior resources’, and ‘creating value by seizing fleeting entrepreneurial opportunities’, for instance. Each subtopic then has a few paragraphs discussing it which are set underneath of the topic and each is incredibly detailed in regards to the content that it offers. The authors have used very logical support in regards to these ideas, and as well they do not overdo generalizations, nor do they make mistakes in logic. The structure of the article is very well done, and absolutely easy to read and follow through. Then we have the issue of how the authors of this article (Sull & Escobarl, 2004) suggest that economic theory offers three different ways that firms use to create value and these approaches are as follows: establishing and defending a personal advantage, building and leveraging superior resources, and seizing fleeting opportunities. There are many contrasts between these three approaches, and the first “emphasizes establishing and defending a desirable position. The underlying logic is to identify an attractive market, establish a secure position, and erect defenses to prevent competitors, customers, and suppliers from appropriating your profits” (Sull & Escobarl, 2004: 15). Then we have the second approach, which is titled in this article as ‘Creating value through superior resources’, and the main difference with this approach is that it “emphasizes winning by developing and leveraging valuable resources. Resources, according to this view, include hard assets such as specialized factories or prime real estate as well as intangible assets, such as brand, technology, and even knowledge possessed by employees or embedded in organizational processes” (Sull & Escobarl, 2004: 15). Finally we have the third approach, which is titled as ‘Creating value by seizing fleeting entrepreneurial opportunities’, and the main difference or contrast in regards to this approach is that “In this approach, an alert manager or entrepreneur notices a gap in the market – perhaps a customer segment that is currently under-served or the potential to use a new technology to produce existing products cheaper or better. The manger or entrepreneur then develops a plan for filling this gap in the market and marshals the resources (e.g. cash, people, technology) necessary to exploit this opportunity” (Sull & Escobarl, 2004: 16). Then finally we must discuss the issue of how in such an uncertain world businesses can ensure that they will be able to continue to create value and sustain an advantage over the competition; this article has discussed this a great deal, as we have seen that there are actually three different approaches in particular that can be used here, and all that is then needed to be done is for the business to decide on one of these three approaches, dependant on which in particular would work best for their situation. CONCLUSION From this review, there are several different things in particular that we can conclude, namely the fact that this article is one which has great information and significant influence for all businesses everywhere. Regardless of what type of genre or area your business is in, you can really use the information that is given in this article to your advantage, and particularly in regards to the issue of economic theory and the three different methods that firms and businesses can use in order to create value – these issues which are the main basis of this article, are discussed strategically, properly, and coherently, and this article was definitely one which was easy to follow and full of information. References Ackerman, S-R (1996). ‘Altruism, Nonprofits, and Economic Theory’. Journal of Economic Literature 34(2), pp. 701-728. Anderson, P (1999). ‘Complexity Theory and Organization Science’. Organization Science 10(3). Blaug, M (1997). Economic Theory in Retrospect. Cambridge: Cambridge University Press. Chakravarthy, B (1997). ‘A New Strategy Framework for Coping With Unpredictability. Sloan Management Review, Winter. Chandler, A. D (1977). 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